Northern Trust has added liability benchmarking to its Investment Risk and Analytical Services product offering for custody clients on a global basis.
The customized benchmarks, it says, allow plan sponsors to more accurately gauge the performance of a liability-driven investment (LDI) program by measuring a plan’s assets against the fair market value of its obligations over a period of time.
“Liability benchmarking provides a new scorecard for plan sponsors to measure overall performance,: says Paul d’Ouville, global research director of Investment Risk and Analytical Services at Northern Trust. “In an LDI framework, our clients are focusing on the liability side of the equation like never before.”
The service provides the client with flexible modeling options, such as the selection of an appropriate discount curve or multiple cash flow profile scenarios.
Using the custom benchmark, plan sponsors can match the performance of actual assets versus liabilities and evaluate the impact of an LDI strategy on the plan’s surplus or deficit.
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