An alternative approach to LDI
This Russell Viewpoint describes a new approach to liability-driven investing (LDI) and introduces a new term into the LDI lexicon: Hedge long first. Hedge long first pays more attention to some liabilities than to others. Specifically, it concentrates on the longest-dated liability cash flows. To illustrate the impact of this approach, our research contrasts it to an LDI approach which places equal weight on all liability cash flows, and which we will refer to as “liability-weighted” LDI.