Investment - Articles - Broadstone comments on the apprehension surrounding LDI

 “Speaking to trustees from schemes of all sizes, it’s clear there is still significant trepidation and myth surrounding liability-driven investments. With interest rates staying at historic lows, the only guidance we can give trustees with any certainty is that market expectations indicate that rates will go up at some point, and that no one knows exactly when that will be. So consultants and investment managers should be taking the time to explain to trustees how LDI can help a scheme to better manage interest rate and inflationary risk, including both the potential benefits and drawbacks.

  

 “Explaining the ins and outs of LDI can quickly become complex, and often takes numerous sessions to establish a firm understanding for the trustee. In our experience, a single session covering the importance of inflation and interest rate risks, and how LDI tackles them, is sufficient to engage trustees into learning how it would work for their scheme.”