Liability-Driven Investing (or “LDI”) has emerged in recent years as an investment framework that monitors investment risk and return objectives relative to a market-based value of liabilities. An LDI approach seeks to manage growth and volatility in the relative value of assets and liabilities – the most important drivers for many clients in meeting long-term income or expenditure objectives.

At RBC GAM (US), we aim to deliver exceptional service to clients and their advisors through a very clear understanding of the economic nature of liabilities and the regulatory and accounting rules impacting their measurement. This allows us to make a meaningful contribution to the development of investment solutions and manage liability-related risks.

We follow five key steps to develop and monitor successful LDI strategies:

1. Decide which estimate of future obligations reflects the primary objective (e.g., Pension Plan, Workers Compensation, Other Post Employment Benefits (OPEB), Bank Owned Life Insurance (BOLI), Nuclear Decommissioning Trusts, etc.), and analyze the present value of these obligations in market value terms to understand the sensitivities to interest rates and inflation.
2. Build a Minimum Risk Portfolio (or “MRP”) that matches the investment characteristics of the liability cash flows as closely as possible.
3. Compare different investment strategies to the MRP to identify potential strategies that enhance the expected return of the plan’s assets while still meeting clients’ “risk budget” relative to the liability benchmark.
4. Set an appropriate asset mix benchmark that reflects the chosen investment strategy.
5. Monitor performance relative to the asset mix benchmark (or portion thereof relevant to their mandate) and the asset mix policy decision relative to the MRP or liability benchmark.

Name	Position	Email	Telephone #
John Utter	Vice President, Head of Institutional Client Service – U.S.		612.376.7187
John Utter leads the firm's client service team and is responsible for developing and implementing an industry leading client service practice. He joined RBC GAM (US) in 2010, from RiverSource Investments, where he was a divisional sales director, leading a sales team that helped clients with investment solutions ranging from traditional equities and fixed income to portable alpha and absolute return strategies. Before that, John spent 15 years in institutional sales assisting banks, insurance companies, and hedge funds in the U.S. and Europe with their fixed income investments. He began his career in the investment industry in 1988. John earned a BA from St. Lawrence University.