Strategies & Capabilities

Cashflow Driven Investing

Many pension schemes face challenges in meeting obligations amid difficult market conditions, therefore liquidity planning is an important consideration as schemes mature.
We have a long heritage of fixed income investing which forms the core of our CDI approach, providing:

a low risk/low governance approach
an investment process that benefits from both quantitative and fundamental insights
a rigorous ESG screening process

Our innovative CDI approach

We have developed CDI solutions that allow investors to reliably manage their cashflow obligations using a liquid, diversified and transparent approach, regardless of their scheme size.

Our CDI investment approach is built upon four pillars:

Heritage & Capabilities

We are a global manager with significant scale

Index heritage — focus on cost minimization and efficient implementation
Global relationships — access to new issuance
Trading resources — across the globe

Low-Risk and Low-Governance Approach

Our CDI strategies use high-quality corporate bonds only

Simple to understand and implement
Transparent asset prices for monitoring purposes
Liquid assets to add flexibility

We intentionally avoid illiquid assets which offer higher yields but are more complex to manage and can potentially hinder near-term buyout plans.

Innovative Strategy

A quantitative-based approach with fundamental oversight optimised to match cashflows. We select from a global bond universe

Reduces concertation risk
Provides for higher-capacity solution

Strong ESG Capabilities

A solution based on our ESG experience

We screen for UN Global Compact violators, controversial weapons and severe ESG controversies

We can adapt to client-specific requirements for segregated portfolios

Our Solutions

Our solution can be applied in either segregated or pooled fund structures, as below:

Segregated

For larger portfolios, clients can set their own cashflow requirements, as well as bespoke portfolio constraints

Set your cashflow requirements and tolerances
Customise your own constraints:
1. Ratings constraints
2. Sector constraints
3. Maximum allocation to foreign currency bonds
4. Custom exclusion list or ESG screens

Pooled Fund

Our CDI funds can be combined to match a desired liability profile and also blended with LDI to deliver a comprehensive solution

Three maturing funds with 5-year ranges
Funds distribute coupons and principal
Allocation to each fund tailored to your needs

Related Insights

A Case for CDI

Many pension schemes face challenges in meeting obligations amid difficult market conditions, therefore liquidity planning is an important consideration as schemes mature.

The DB End Game — Helping Schemes Prepare for the Finish Line

Recent years have seen trustees and corporate sponsors of defined benefit (DB) schemes explore ways of managing and reducing risks as they meet their obligations to members.

Get In Touch

To learn more about our Cashflow Driven Investing approach please contact us

Disclaimer

Marketing Communication. Professional Clients Only.

Investing involves risk including the risk of loss of principal.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.

The information provided does not constitute investment advice as such term is defined under the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor's or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor. All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This communication is directed at professional clients (this includes eligible counterparties as defined by the Financial Conduct of Authority (FCA)) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description (including retail clients) should not rely on this communication.

These investments may have difficulty in liquidating an investment position without taking a significant discount from current market value, which can be a significant problem with certain lightly traded securities.

Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.

The views expressed in this material are the views of the Liability Driven Investing team through the period ended 28 February 2021 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

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This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.

Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.

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