State Street Introduces Liability-Driven Investment Solution

April 10, 2006 ( - State Street Global Advisors (SSgA) has launched a US version of its Pooled Asset Liability Matching solution (PALMS), designed to help pension plan sponsors manage interest rate and duration risk within a liability-driven investment framework.

PALMS uses a pooled series of five-year swaps vehicles – primarily invested in zero coupon swaps – reaching out over 40 years to help plans extend the duration of their assets and manage changes in interest rates to ensure sufficient cash flows for projected pension liabilities, the announcement said. Plans can choose how much liability risk they wish to remove by varying the percentage allocation to particular maturity strategies.

The solution offers transparent pricing, flexibility to adjust investment allocations across the maturity spectrum, fixed entry and exit spreads, and monthly valuations.

“PALMS gives pension funds the opportunity to match their future liabilities in a flexible, cost-efficient way that can’t be achieved using conventional bonds,” said Alistair Lowe, director of global asset allocation and currency at SSgA, in the announcement.

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