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Liability-Driven Investing

Parametric’s Liability-Driven Investing (LDI) strategies are designed to help pension plans manage assets in concert with their liabilities. LDI is an exercise in investing assets to fund future liabilities while balancing the resulting risk exposures on a total plan basis. 

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Parametric LDI focuses on the total portfolio, enabling plan sponsors to better observe the total risk profile of assets versus liabilities and to create a more efficient liability hedge.

Parametric LDI is a suite of comprehensive, systematic, risk-managed solutions for all stages of the LDI process. Recognizing that each investor’s LDI journey is unique, Parametric offers a broad range of solutions that can be customized to support the goal of funding future liabilities while balancing risk exposures on a total plan basis. 

Investing involves risk. There is no guarantee that the strategy will be successful. All investments are subject to loss.

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Why choose Parametric?

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Total firm

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Years of firm

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Years of LDI

As of 6/30/2022

How it works

Parametric LDI is tailored to meet the individual plan’s needs. Through our pension and analysis program, we analyze plan liabilities and assets to understand key pension risks. We thoughtfully assess liability cash flows, yield curve suitability, and liability characteristics to design an effective hedging program that can incorporate cash, bonds, a completion overlay, and glide path management.

Parametric offers many options that help meet the evolving needs of a sponsor’s LDI strategy.

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Intended benefits of Liability-Driven Investing

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Innovative solutions

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LDI offers customization across physical and overlay programs based on our expertise across derivatives and fixed income. Pension plan managers can choose from standard or liability-aware benchmarks with dynamic hedge-ratio management. 
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A focus on risk

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Our risk-based analysis and monitoring program provides an in-depth view of assets and liabilities. We keep our focus on risk—or winning by not losing—throughout the investment process.

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Experience and scale

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Parametric has more than 30 years’ experience managing systematic, rules-based strategies. Our size, scale, and proprietary technology enable us to deliver customized, cost-effective LDI solutions for clients of all sizes, at all stages of the LDI journey.

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LDI strategy overview

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This Material Is Intended for
Institutional Investors Only

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The information on this area of the Parametric Portfolio Associates® LLC (“Parametric”) website is intended for qualified institutional investors and their consultants. This information is not intended for accredited investors in any jurisdiction outside the United States in which the distribution or sale of Parametric investment services is not authorized.

It is published for informational purposes only and does not purport to address the financial objectives, situation, or specific needs of any investor. If you do not qualify, the information shown on this site (which may include information about our investment strategies and products, market commentary, and composite performance) may not be relevant or appropriate for you. Certain solutions discussed in these materials will be subject to minimum investment amounts and other restrictions that apply. There can be no assurance that any investment product or strategy will achieve its investment objectives or that there will be any return of capital. Performance may be volatile, and investors could lose all or a substantial portion of their investment.

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