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Liability Driven Investing

Liability Driven Investing (“LDI”) is a risk management framework that, used effectively, can help pension funds better assess and reach their financial objectives. The industry has been adopting LDI strategies as traditional “asset-only” investment approaches neglected to account for a material mismatch of non-fixed income assets and fixed pension liabilities, resulting in the two recent pension crises. However, some other LDI strategies still retain significant risk. For example, LDI strategies such as duration pooled funds typically offer false economies and retain significant exposure to non-parallel and large changes in interest rates. Other LDI strategies effectively leverage the effective exposure to equities, and often, unknowingly, materially raise the risk profile of a plan.

Nexus Risk Management and CI Institutional Asset Management execute asset management services within a robust LDI framework enabling our clients to reach their financial objectives and maintain portfolio risks within set limits. Our risk optimization can add substantial value in many cases, on a default-free basis, while simultaneously reducing the exposure to the multiple dimensions of interest rate risk. Even if a pension plan maintains an asset mix that includes equities and/or does not wish to immunize when interest rates are low, effectively taking a large bet on the future direction of interest rates and equity markets, the pension plan should still ensure that the portfolio is risk efficient. Supported by an unparalleled reporting system, CI / Nexus can deliver Risk Optimized LDI solutions that increase returns and reduce risk.

Our Value Proposition

• Significant value added over non-optimized solutions
• Higher returns for less risk
• More effective management of interest rates than duration pooled funds
• Can be implemented for small plans (>10M)
• Increase upside potential if rates rise while reducing downside risk
• Partner with pension consultants to execute sophisticated risk management strategies
• Customized risk reporting and attribution analysis
• Transparency of value added from ALM and additional value added from active asset management

Why CI / Nexus

• Proven track record implementing Risk Optimized LDI solutions for both insurance and pension portfolios
• Over $20 billion assets managed using our proprietary risk solutions and over $65 billion of assets under management
• Proven experts in risk management
• Recognized as thought leaders in ALM, LDI, dynamic hedging and ERM
• Trained over 1,000 risk professionals worldwide
• Leadership roles in industry committees and task forces
• Pioneers in dynamic hedging and risk optimization
• Leading Asset Manager
• Superior credit decision process
• Track-record of delivering equity outperformance
• Economic forecasting expertise
• Tactical Asset Allocation