SEI Global Poll: 4th Annual Poll Finds Interest in Liability Driven Investing Remains High

Half of Organizations in Poll Currently Implementing LDI Strategy

Dec 01, 2010, 09:00 ET from SEI

OAKS, Pa., Dec. 1, 2010 /PRNewswire/ -- An SEI (Nasdaq: SEIC) Global Quick Poll released today shows that the number of pension plans adopting liability driven investing (LDI) strategies has remained steady over the past year. The poll shows that half (50 percent) of all polled plan sponsors are currently using LDI, compared to 54 percent in 2009 and only 20 percent in 2007. The fourth annual LDI poll was completed by 110 executives overseeing pensions ranging from US $30 million to more than US $5 billion in assets. None of the poll participants were current institutional clients of SEI. The poll highlights how the benchmark for pension success has continued to shift away from absolute return and also shows trends around the specific objectives of LDI and investment products being used.

"While the interest in liability driven strategies remains high, the reality is that the timing of implementation will differ from one organization to the next. There are often numerous moving parts within these complex strategies and pension plan sponsors need their providers to deliver expertise and guidance," said Jon Waite, Director, Investment Management Advice and Chief Actuary of SEI's Institutional Group. "At a time when funding levels are low, pensions plan sponsors need insight around how these strategies can be implemented now and in the future to best protect the plan's funded status."

The global poll was conducted by SEI's Pension Management Research Panel and included pension executives from the Netherlands, United Kingdom and United States. This year's results remained on par with 2009 results with only a few exceptions. The most popular benchmark for pension investment success remained "improved funded status," selected by 38 percent. However, this year 22 percent of poll participants selected "minimize or control contributions," thus surpassing "absolute return" as the second most popular primary benchmark.

For the third consecutive year, the most popular definition of LDI among poll participants was different from the previous year, but the top two definitions have remained consistent. "Matching duration of assets to duration of liabilities" was the most popular definition last year, but finished second this year (30 percent). Last year's second most popular definition, "a portfolio designed to be risk managed with respect to liabilities," was the top definition this year, chosen by 39 percent of the poll participants.

Organizations continued to make changes to pension investments, as more than two-thirds (69 percent) said they have made an asset allocation change in the past year. While more than half (51 percent) said consultant recommendations drove those changes, more than a quarter (28 percent) said the changes were made in an effort to better control pension expenses.

Long duration bonds (used by 75 percent) continue to be the most popular investment product used for implementing LDI strategies. Interest rate derivatives saw a significant decrease in popularity over the past year and are currently used by only 24 percent (compared to 40 percent last year).

Use of emerging market debt (used by 36 percent) saw a significant increase compared to 2009 (14 percent), as did short-term cash management (43 percent this year compared to 26 percent in 2009).

A complete summary of the poll is available by emailing seiresearch@seic.com.

About SEI's Institutional Group

SEI's Institutional Group delivers integrated healthcare, retirement and nonprofit investment solutions to more than 500 global institutional clients (of which 340 are U.S. based) in six different countries. SEI enables clients to meet financial objectives, reduce business risk, and fulfill their due diligence requirements through implemented fiduciary management strategies for defined benefit plans, defined contribution plans, endowments, foundations and other balance sheet assets. For more information, visit www.seic.com/institutions.

About SEI

SEI (Nasdaq: SEIC) is a leading global provider of outsourced asset management, investment processing and investment operations solutions. The company's innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of September 30, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $402 billion in mutual fund and pooled assets and manages $164 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations, from numerous offices worldwide. For more information, visit www.seic.com.

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