aiCIO Summit: LDI or Pension Risk Management?

(April 12, 2013) – CenturyLink Investment Management had very good timing with its pre-crisis shift to liability-driven investing (LDI). As in, John Paulson circa 2007-good timing.

But according to Paul Zemsky, CIO of multi-asset strategies at ING Investment Management, and Charlie Service, global co-head of retirement and advisory solutions at UBS Global Asset Management, CenturyLink wasn’t even shifting to LDI. The firm is just practicing good pension risk management. 

“I don’t actually consider what you did LDI, but pension risk management,” Zemsky said during a panel with CenturyLink’s VP of Public Markets Paul Strong at the CIO Summit. “LDI is a tool in that toolkit, but it’s just one. Lengthening duration was another, as with rethinking your allocation to growth assets. Overall, I’d say well done.” 

Service agreed with Zemsky, and credited the firm for making a wise move, regardless of the serendipity of its timing.

“Typically the biggest risk that we see clients taking is interest rate risk on their liabilities,” Service said. “The decision to manage your assets in closer synchronicity to your liabilities is a smart thing to do regardless of where in interest rates are.”

Related Cover Story:Is LDI Dead?