Principal Global Investors Introduces "LDI 2.0"
Next Generation Liability Driven Investment Strategy is Roadmap to De-Risking
August 16, 2011 (Des Moines, Iowa) – Principal Global Investors, along with the retirement actuarial services division of the Principal Financial Group®, announces the launch of “LDI 2.0”, a customizable liability driven investment strategy that allows a plan sponsor to vary the speed of plan de-risking based on the level of interest rates and its funding status. Principal Global Investors is the asset management arm of The Principal®.
Liability driven investing, or LDI, has long been a preferred strategy for many defined benefit plan sponsors. However, in today’s investing environment, a traditional LDI approach is less attractive. Plan sponsors and investors are seeking a customized, flexible and actionable LDI strategy that allows for a comfortable pace of plan de-risking based on funding status and interest rates.
“The right LDI solution is different for each plan sponsor, and will vary based on a sponsor’s primary concerns, which may include the level of underfunding, the volatility of funding status or the level of interest rates,” said Mark Cernicky, product specialist with Principal Global Fixed Income. “Clients and their consultants who utilize LDI 2.0 will benefit from the expertise of, and collaboration with, Principal Global Investors in the creation of a customized approach for a large range of plans.”
LDI 2.0 relies on the implementation of two dimensions of liability driven investing: the traditional asset allocation glidepath that transitions a pension plan from a high equity allocation to high fixed income allocation as the plan’s funding ratio improves, and the transition of the fixed income allocation from core to long duration as interest rates rise.
In addition to gaining access to Principal Global Investors’ expertise, defined benefit plan sponsors utilizing an LDI 2.0 solution also have the option to tap into the actuarial expertise within The Principal’s retirement and investor services.
“We’re pleased to be able to offer this next generation LDI strategy,” said Barry Young, consulting actuary with The Principal. “This approach provides plan sponsors of both frozen and active plans a way to minimize volatility while they reduce their funding gap. LDI 2.0 is their roadmap to de-risking.”
Click here to download, “LDI: Planning, Process and Precision” (PDF: 350 KB).
About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $239.1 billion in assets primarily for retirement plans and other institutional clients.
About the Principal Financial Group
The Principal Financial Group® (The Principal®) is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500®, the Principal Financial Group has $335.8 billion in assets under management and serves some 16.5 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.
- As of June 30, 2011. Principal Global Investors is the asset management arm of the Principal Financial Group® (The Principal®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; and the majority owned affiliates of Principal International, Inc.
- “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
- As of June 30, 2011.