Liabilitydriven investment strategies focus on meeting obligations from "summary" of Institutional Investment Management by Frank J. Fabozzi
Liability-driven investment strategies are designed to ensure that an institution can meet its obligations in the future. These strategies recognize that the primary goal of an institutional investor is not simply to achieve the highest possible return on investment, but rather to generate returns that are sufficient to fulfill its commitments. By focusing on meeting obligations, institutional investors can better manage risk and uncertainty in their portfolios. The key idea behind liability-driven investment strategies is to align the assets of the institution with its liabilities. This involves taking into account the timing and amount of future payments that the institution is obligated to make, such as pension payments or insurance claims. By matching the duration and cash flow characteristics of assets with liabilities, an institution can reduce the risk of being unable to meet its obligations when they come due. In practice, liabilit...
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