Research Library
LDI Misapplied: Income Portfolios and Liability-Driven Investing
By Tom Idzorek, David Blanchett | 02 October 2017
Liability-driven investing (LDI)—in particular liability-relative optimization—represents a fundamental improvement over more common asset-only portfolio optimization techniques, such as mean-variance optimization. Almost all portfolios exist to pay for some future form of consumption, so liability-relative optimization is almost always more appropriate than asset-only approaches. By considering liability characteristics when solving for the asset allocation, LDI techniques take advantage of the natural hedging quality of certain investments.
Terms of UsePrivacy PolicyGlobal ContactsSecurity CenterJobs
© 2017 Morningstar. All rights reserved.