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ALM vs LDI

O

Oxymoron

Ton up Member
In the two actuarial techniques chapter, we read about ALM and LDI. I can't seem to spot the difference between the two and they seem to reflect the exact same thing - assets replicating liability profile.

What am I missing out?

Thanks.
 
Oxymoron said:
In the two actuarial techniques chapter, we read about ALM and LDI. I can't seem to spot the difference between the two and they seem to reflect the exact same thing - assets replicating liability profile.

What am I missing out?

Thanks.
Click to expand...

It's marketing, for Actuaries who like Investments and wanted to cut CFAs out so they used a different name. The differences are too small for you to consider them as separate processes.
 
LDI is the investment process of building a liability driven investment portfolio. It will use the process of modelling assets and liabilities under various scenarios and using various assumptions and investment strategies. In other words it will heavily rely on the use of an ALM. But yes, the terms are very close.
 
We did an ALM at our company last year and the output was an Investment strategy x%A,Y%B and it holds for 2 years, the LDI is what you do in between, we call it ALM review and do it biannually.
 
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