Liability Driven Investing (LDI)

LDI at NN Investment Partners

  • Simple and effective LDI Solutions

  • Innovation in LDI

  • Responsiveness and flexibility in changing market environment

Our solutions are effective and predictable in achieving the goal of hedging liabilities. We advise clients on most appropriate LDI solution, given the client’s unique characteristics and preferences.


Liability hedging strategy

NN Investment Partners can help pension funds with their liability hedging strategy. We offer a number of LDI solutions catering to various types of clients – from the smaller clients requiring simple but effective solutions to the larger clients with more complicated needs and reporting requirements.

Fund solution

Robust, efficient and flexible solution for clients seeking effective hedge with minimum complexity (central clearing, liquidity management and duration management are managed within the fund).

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Discretionary solution

Highly customized solution for clients with specific requirements. This solution normally includes cash and collateral management, which is crucial in the central clearing environment.

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Customized fund solution

Effective solution for clients who want to have benefits of discretionary management while utilizing efficiencies of NN IP in relation to counterparty policies and liquidity management.

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Cash and Collateral management

Cash and collateral management is an integral part of LDI solutions. Given high liquidity needs and increased focus on central clearing regulations surrounding derivative trading, integrated cash and collateral management is crucial for successful LDI management.

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Adding complementary assets to LDI portfolio

  • All three LDI solutions can be further customized by adding complementary asset categories, such as credits, inflation-linked bonds, mortgages, loans, etc. to increase yield of the portfolio.
  • Liability hedging strategy is always designed by taking into account interest rate sensitivity of all assets in the matching portfolio.

The team

Wim Veraar

Wim Veraar

Head Fixed Income Solutions, Management Team Investments

Experience since 1982

"Within the Balance Sheet Management Team the LDI business is one of the key businesses we manage. Our clients range in size from millions to billions, from fund solutions to discretionary mandates, but all share the same concerns. Low interest rates and rising costs, partly due to regulatory pressure. The low interest rate environment, the rising life expectancy and demand for steady pensions make us aware of the impact of costs and making the right short term decisions with a longer term horizon. As we run this business already for many years and for different type of clients, we think our awareness of these problems helps us, in making the right decisions for our clients."

- Wim Veraar -

Arjen Monster

Arjen Monster

Head of LDI advice

Experience since 1998

"Designing an LDI strategy requires in depth market and regulatory knowledge and a deep understanding of the needs and preferences of the client. After all, the LDI portfolio belongs to the heart of the portfolio and a proper design is therefore absolutely essential. We provide customized advice to our clients to set-up an LDI strategy that perfectly fits their needs and beliefs, supports them to achieve their long term goals, is future proof and makes life as easy and convenient as possible."

- Arjen Monster -

Menno van Eijk

Menno van Eijk

Head of Cash Solutions & Investments

Experience since 2001

“An overnight deposit is a lot more closely related to an interest rate swap with a 30 year maturity than most people realise. Active cash management is essential in any LDI portfolio, from providing the safety and liquidity needed for margin calls to matching the euribor leg of the interest rate swap to eliminate a cash drag. Regulatory changes such as central clearing and Basel III further increase the importance of cash and liquidity as an asset class within LDI management.  That’s why we work so closely together with the LDI portfolio managers.”

- Menno van Eijk -

Xavier Bouthors

Xavier Bouthors

Head of Collateral and Securities Lending

Experience since 2001

"The regulatory environment significantly increased the need for collateral and intraday liquidity for financial institutions trading OTC derivatives. Therefore collateral optimization becomes increasingly important for LDI portfolio management in order to determine the optimal use of assets and funding source. The integration of collateral optimization within the Balance Sheet Management Team creates the necessary efficiency and sophistication for LDI portfolio managers to offer the best strategies."

- Xavier Bouthors -

Contact

NN Investment Partners

Haagse Poort (low rise)

Schenkkade 65
Postbus 90470
2509 LL Den Haag
The Netherlands