[Verse 1] Picture a pension fund with billions to invest Promising workers their retirement nest But markets go up and markets go down How do we keep those promises sound? Assets and liabilities dance through time Interest rates shift like rhythm and rhyme When bond yields fall, our duties grow tall That's surplus risk threatening us all [Chorus] Match the duration, hedge the rate Asset-liability, correlate LDI strategies, that's the way Liability-driven investing saves the day Surplus at risk, measure and mind Keep assets and duties aligned When markets shift, we won't fall behind With pension risk management refined [Verse 2] Surplus is simple, assets minus debts But volatile markets place risky bets When interest drops by one percent down Liabilities jump, surplus can drown Duration matching is our first defense Long-term bonds make financial sense If rates move up, if rates move down Both sides together, safe and sound [Chorus] Match the duration, hedge the rate Asset-liability, correlate LDI strategies, that's the way Liability-driven investing saves the day Surplus at risk, measure and mind Keep assets and duties aligned When markets shift, we won't fall behind With pension risk management refined [Bridge] Value at Risk for surplus we measure Ninety-five percent, protect this treasure Glide path strategies, reduce risk with time As funding improves, the stars align Derivatives help us hedge our bets Interest rate swaps, minimize regrets But don't forget about liquidity needs Cash flow matching plants the seeds [Verse 3] Funded ratio shows our current state One hundred percent, we're doing great But underfunded means we're in the red Risk management keeps us ahead Dynamic hedging as conditions change Rebalance portfolios, extend the range From growth-seeking to liability-matching Pension fund success needs careful watching [Chorus] Match the duration, hedge the rate Asset-liability, correlate LDI strategies, that's the way Liability-driven investing saves the day Surplus at risk, measure and mind Keep assets and duties aligned When markets shift, we won't fall behind With pension risk management refined [Outro] Protect the promises we've made Through market storms, don't be afraid With LDI as our guiding light Pension fund management done right
← Pension Fund Basics and Funded Status | Human Capital in Wealth Planning →