LDI: The Quest for “Del Boca Vista”
Jul 7th, 2008 | Filed under: Liability Driven InvestingThe results from a survey were released last week on a topic that will either interest you or bore you tears: Liability-Driven Investing (LDI). We’ve covered this topic here at AllAboutAlpha.com because one of its constituent parts is often a hedge fund or portable alpha strategy.
More on the survey below. But first, if you do all you can to avoid this topic; you might be well served to give it a second chance. Try looking at it this way…
Pension Liabilities: Del Boca Vista
Frank Costanza: Are you telling me there’s not one condo available in all of Del Boca Vista?
Morty: That’s right. They went like hotcakes.
Frank: How’d you get yours?
Morty: Got lucky.
Frank: Are you trying to keep us out of Del Boca Vista?!
Let’s say you’re Seinfeld’s Frank Costanza (George’s father) and you’re saving for a glorious retirement at Del Boca Vista, a well-manicured retirement community in sunny Florida. It’s 1998 and you calculate that your annual savings plus a few good hedge fund investments will cover the costs of that dream condo (to be built some time in 2011).
Each year you meet with your financial planner who tells you that you’re on track for your dreams. But somewhere around 2002, she tells you that despite a killer year for your hedge fund holdings, you’re coming up short on your goal of buying that condo. Apparently the South Florida real estate market is going crazy.
To continue reading this article please login (at the right) or click here to learn more about accessing our archives.
