Liabilitydriven investing focuses on meeting future obligations from "summary" of Institutional Investment Management by Frank J. Fabozzi
Liability-driven investing is a strategy that centers around fulfilling the future financial obligations of an institution. This approach involves aligning the investment portfolio with the liabilities of the institution, such as pension payments or insurance claims, to ensure that there are adequate funds available to meet these commitments. By focusing on the specific liabilities of the institution, rather than simply seeking to maximize returns, liability-driven investing aims to provide a more stable and secure financial future. The key principle of liability-driven investing is to match the duration and cash flow characteristics of the assets in the portfolio with those of the liabilities. This means that the investment strategy is tailored to the specific needs and timeline of the institution's obligations, rather than pursuing a one-size-fits-all approach. By taking into account the timing and nature of the liabilities, liability-driven investing ...
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