Liability-driven investing (LDI): A mundane name that signals the most important secular shift in the management of defined benefit pensions in the last decade.
Both in America and abroad (particularly the United Kingdom and Netherlands), this shift arrives via a confluence of factors. Foremost, of course, are the regulatory changes forcing corporations to treat pension liabilities as actual benefits that will one day need to be paid.
As signaled by this survey, the trend is both continuing and attracting more providers. This year, nine LDI specialists qualified to be rated and ranked alongside their competitors, compared to five in 2014. And while industry stalwarts such as NISA Investment Advisors and BlackRock once again demonstrate they are largely admired by their client base, a relatively unheralded provider on the LDI block—Goldman Sachs Asset Management (GSAM)—arguably ‘won’ the 2015 edition of this survey.
Beyond GSAM’s rise, these pages are packed with much data. Combined, they tell a singular story: LDI may be a boring name, but it’s certainly not a boring shift in the way trillions of dollars are managed.
The 2015 Liability-Driven Investing (LDI) Survey was conducted from late July through October 22, and asked asset owners about their practices and views regarding funding, de-risking, and LDI strategies. Of all responses, 169 were identified as qualifying—i.e., by being from a senior investment official, with the authority and knowledge to answer LDI-related questions, at a qualified fund. For the third year running, the survey includes LDI vendor evaluations. Asset owners that indicated they use LDI were asked how they selected their provider(s) and also to rate those providers’ services in various categories. Six vendors—PIMCO, NISA, LGIMA, GSAM, Prudential and BlackRock—received a sufficient number of client evaluations to be analyzed in detail. In addition, J.P. Morgan, Loomis Sayles, and Standish Mellon received enough responses to be mentioned without written analysis.