Liability-Driven Investment (LDI)

Liability-Driven Investment (LDI) is an investment strategy focused on matching assets with future financial obligations, like pension payments or insurance claims. The goal is to minimize the risk of not having enough money when these liabilities are due. Investors tailor their investments to generate predictable cash flows that align with when and how much money will be needed. This approach helps ensure that obligations are met regardless of market fluctuations, providing stability and security for organizations with long-term liabilities.