Ease the Burden of Managing Risk
Risk remains important for many institutional investors, but dealing with it effectively takes time and energy. How investors approach it should therefore depend on their governance capacity.
read moreLDI: More on Going Global in Bonds
For liability-driven investors, exposure to global bonds offers important benefits: a strong correlation to domestic debt, with greatly reduced volatility. However, these are not the only positives. Today, we’ll look at some other important benefits—such as greatly expanding the investable universe and offering a natural hedge against the tail risk of a domestic credit crisis—and [...]
read moreLDI: How Large an Allocation to Global Bonds?
Liability-driven investors can reap significant benefits from globalizing their long-duration bond portfolios, but how much should they sow? How large an allocation to nondomestic bonds is appropriate? Our research suggests that even a modest allocation can meaningfully improve an LDI portfolio’s risk-adjusted return potential.
read moreLDI: The Case for Going Global in Bonds
Despite compelling evidence in favor of global diversification, investors in many markets around the world continue to have a strong “home bias”—a preference for domestic over foreign assets. Nowhere is this tendency more apparent than in the ranks of liability-driven investors. But our research shows that LDI investors, too, can reap significant benefits from going [...]
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