Low interest rates and extremely volatile markets provided a wild ride in 2020, and may leave plan sponsors reconsidering their liability driven investing (LDI) strategy. In this conversation with Tom Harvey and Bill Lawrence, we break down what happened to plans in 2020, our outlook for fixed income and spreads, and where we see the key decisions for plan sponsors as we head into 2021.
Senior Director, Stategic Advice
SEI Institutional Group
Bill Lawrence, CFA
Chief Investment Officer
SEI Traditional Strategies Group
In this question and answer session, the experts answered:
- What has LDI traditionally done for us?
- Why was 2020 a different story?
- What is your outlook on rates and spreads as we enter 2021?
- How are your various managers positioned to help plan sponsors?
- How do your market views impact how you are thinking about the fixed income allocation in your LDI portfolios?
- Given SEI's outlook on rates/spreads, how do we think about LDI, its role in the portfolios, and investment grade long duration fixed income as an asset class?
- What are some of the factors we need to evaluate when we think about reconsidering our strategy?
LDI is primarily slated toward gaining enough assets to cover all current and future liabilities.
Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company (SEI).
Investing involves risk including possible loss of principal. There can be no assurance goals will be met nor that risk can be managed successfully. Bonds and bond funds will decrease in value as interest rates rise. Alternative investments are subject to a complete loss of capital and are only appropriate for parties who can bear that risk and the illiquid nature of such investments.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only and should not be interpreted as legal opinion or advice.