Tag Archives: Asset allocation

07.31.25
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When Should I Use CFM?

By: Russ Kamp, CEO, Ryan ALM, Inc.

Good morning. I’m currently in Chicago in the midst of several meetings. Yesterday’s meetings were outstanding. As you’d expect, the conversations were centered on DB pension plans and the opportunity to de-risk through a Cash Flow Matching strategy (CFM) in today’s economic environment. The line of questioning that I received from each of my meeting hosts was great. However, there does seem to be a misconception on when and how to use CFM as a de-risking tool. Most believe that you engage CFM for only the front-end of the yield curve, while others think that CFM is only useful when a plan is at or near full funding. Yes, both of those implementations are useful, but that represents a small sampling of when and how to implement CFM. For instance:

As a plan sponsor you need to make sure that you have the liquidity necessary to meet you monthly benefits (and expenses). Do you have a liquidity policy established that clearly defines the source(s) of liquidity or are you scurrying around each month sweeping dividends, interest, and if lucky, capital distributions from your alternative portfolio? Unfortunately, most plan sponsors do not have a formal liquidity policy as part of their Investment Policy Statement (IPS). CFM ensures that the necessary liquidity is available every month of the assignment. There is not forced selling!

Do you currently have a core fixed income allocation? According to a P&I asset allocation survey, public pension plans have an average 18.9% in public fixed income. How are you managing that interest rate risk, which remains the greatest risk for an actively managed fixed income portfolio? As an industry, we enjoyed the benefits of a nearly four decades decline in U.S. interest rates beginning in 1982. However, the prior 28-years witnessed rising rates. Who knows if the current rise in rates is a blip or the start of another extended upward trend? CFM defeases future benefit payments which are not interest rate sensitive. A $2,000 payment next month or 10-years from now is $2,000 whether rates rise or fall. As a result, CFM mitigates interest rate risk.

As you have sought potentially greater returns from a move into alternatives and private investments, not only has the available liquidity dried up, but you need a longer time horizon for those investments to mature and produce the expected outcome. Have you created a bridge within your plan’s asset allocation that will mitigate normal market gyrations? A 10-year CFM allocation will not only provide your plan with the necessary monthly liquidity, but it is essentially a bridge over volatile periods as it is the sole source of liquidity allowing the “alpha” assets to just grow and grow. That 10-year program coincides nicely with many of the lock-ins for alternative strategies.

There has been improvement in the funded status of public pension plans. According to Milliman, as of June 30, 2025, the average funded ratio for the constituents in their top 100 public pension index is now 82.9%, which is the highest level since December 2021. That’s terrific to see. Don’t you want to preserve that level of funding and the contribution expenses that coincide with that level? Riding the rollercoaster of performance can’t be comforting. Given what appears to be excessive valuations within equity markets and great uncertainty as it relates to the economic environment, are you willing to let your current exposures just ride? By allocating to a CFM program, you stabilize a portion of your plan’s funded status and the contributions associated with those Retired Lives Liability. Bringing a level of certainty to a very uncertain process should be a desirable goal for all plan sponsors and their advisors.

If I engage a CFM mandate, don’t I negatively impact my plan’s ability to meet the return objective (ROA) that we have established? NO! The Ryan ALM CFM portfolio will be heavily skewed to investment-grade corporate bonds (most portfolios are 100% corporates) that enjoy a significant premium yield relative to Treasuries and agencies. As mentioned previously, public pension plans already have an exposure to fixed income. That exposure is already included in the ROA calculation. By substituting a higher yielding CFM portfolio for a lower yielding core fixed income program benchmarked to the Aggregate index, you are enhancing the plan’s ability to achieve the ROA while also eliminating interest rate risk. A win-win in my book!

So, given these facts, how much should I allocate to a CFM mandate? The answer is predicated on many factors, including the plan’s current funded status, the ability to contribute, whether or not the plan is in a negative cash flow situation, the Board’s risk appetite, the current ROA, and others. Given that all pension systems’ liabilities are unique, there is no one correct answer. At Ryan ALM, we are happy to provide a detailed analysis on what could be done and at what cost to the plan. We do this analysis for free. When can we do yours?

07.16.25
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Really Only One Significant Influence

By: Russ Kamp, CEO, Ryan ALM, Inc.

Managing fixed income (bonds) can be challenging as there are a plethora of risks that must be evaluated including, but not limited to, credit, liquidity, maturity/duration, yield, prepayment and reinvestment risk, etc. within the investment-grade universe. But the greatest risk – uncertainty – remains interest rate risk. Who really knows the future direction of rates? As the graph below highlights, U.S. interest rates have moved in long-term secular trends with numerous reversals along the way. Does that mean that we are headed for a protracted period of rising rates similar to what was witnessed from 1953 to 1981 or is this a head fake along the path to historically low rates?

When rates are falling, it is very good for bonds as they not only capture the coupon, but they get some capital appreciation, too. However, when rates rise, it is a very different game. Yes, rising interest rates are very good for pension funds from a liability perspective, as the present value (PV) of those future benefit payments (I.e. liabilities) is reduced, but the asset side may be hurt and not only for bonds but other asset classes as well.

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This is the primary reason why bonds should be used for their cash flows of interest and principal and not as a performance generator. The cash flows should be used to meet monthly benefits and expenses chronologically through a cash flow matching strategy (CFM). Unfortunately, Bonds are frequently used for performance and perhaps diversification benefits while compared to a generic index, such as the BB Aggregate index, which doesn’t reflect the unique characteristics of the pension plan’s liabilities.

U.S. interest rates are presently elevated but aren’t high by historic standards. However, the current level of rates does provide the plan sponsor with a wonderful opportunity to take risk from their traditional asset allocation by defeasing a portion of the plan’s liabilities from next month out as far as the allocation will cover. While the bond portfolio is funding monthly obligations, the remaining assets can just grow unencumbered.

Given the uncertainty regarding the current inflationary environment, betting that U.S. rates will fall making a potential “investment” in bonds more lucrative is nothing short of a crapshoot. Investing in a CFM strategy helps to mitigate interest rate risk as future values are not interest rate sensitive.

07.09.25
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Problem/Solution: Asset Allocation

By: Ronald J. Ryan, CFA, Chairman, Ryan ALM, Inc.

In this post, Ron continues with his series on identifying solutions to various pension-related problems. This one addresses the issue of asset allocation being driven exclusively from an asset perspective.

Most, if not all asset allocation models are focused on achieving a total return target or hurdle rate… commonly called the ROA (return on assets). This ROA target return is derived from a weighting of the forecasted index benchmark returns for each asset class except for bonds which uses the yield of the index benchmark. These forecasts are generally based on some historical average (i.e. last 20 years or longer) with slight adjustments based on recent observations. As a result, it is common that most pensions have the same or similar ROA. 

This ROA exercise ignores the funded status. It is certainly obvious that a 60% funded plan should have a much higher ROA than a 90% plan. But the balancing item is contributions. If the 60% funded plan would pay more in contributions than the 90% plan (% wise) then it can have a lower ROA. I guess the question is what comes first. And the answer is the ROA with contributions as a byproduct of that ROA target. The actuarial math is whatever the assets don’t fund… contributions will fund.

If the true objective of a pension is to secure and fully fund benefits and expenses (B+E) in a cost-efficient manner with prudent risk, then you would think that liabilities (B+E) would be the focus of asset allocation. NO, liabilities are usually missing in the asset allocation process. Pensions are supposed to be an asset/liability management (ALM) process not a total return process. Ryan ALM recommends the following asset allocation process:

Calculate the cost to fully fund (defease) the B+E of retired lives for the next 10 years chronologically using a cash flow matching (CFM) process with investment grade bonds. CFM will secure and fully fund the retired lives liabilities for the next 10 years. Then calculate the ROA needed to fully fund the residual B+E with the current level of contributions. This is calculated through an asset exhaustion test (AET) which is a GASB requirement as a test of solvency. The difference is GASB requires it on the current estimated ROA before you do this ALM process. Ryan ALM can create this calculated ROA through our AET model. If the calculated ROA is too high, then either you reduce the allocation to the CFM or increase contributions or a little bit of both. If the calculated ROA is low, then increasing the allocation to CFM is appropriate. Running AET iterations can produce the desired or most comfortable asset allocation answer.  

Cash flow matching (CFM) will provide the liquidity and certainty needed to fully fund B+E in a cost-efficient manner with prudent risk. The Ryan ALM model (Liability Beta Portfolio™ or LBP) will reduce funding costs by about 2% per year or roughly 20% for 1-10 years of liabilities. We will use corporate bonds skewed to A/BBB+ issues. According to S&P, investment grade defaults have averaged 0.18% of the IG universe annual for the past 40-years. Fortunately, Ryan ALM has never experienced a bond default in its 21-year history (knock wood).

Assets are a team of liquidity assets (bonds) and growth assets (stocks, etc.) to beat the liability opponent. They should work together in asset allocation to achieve the true pension objective.

For more info on cash flow matching, please contact Russ Kamp, CEO at  rkamp@ryanalm.com

07.07.25
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Don’t Engage in a Cash Sweep – Dividends Matter!

By: Russ Kamp, CEO, Ryan ALM, Inc.

We’ve already shared with you the importance of dividends to the long-term return of the S&P 500 by referencing studies conducted by Guinness Global Investors.

According to the Guinness study, which was last updated as of April 2020, the contribution to return of the S&P 500 from dividends and dividends reinvested for 10-year periods since 1940 was a robust 47% down insignificantly from 48% a decade ago. Extending the measurement period to 20 years from 1940 forward highlights an incredible 57% contribution to the total return of the S&P 500 from dividends. Importantly, this study is on the entirety of the S&P 500, not just those companies that pay dividends. If the universe only included dividend payers, this analysis would reveal strikingly greater contributions since roughly 100 S&P 500 companies are not currently paying a dividend.

As if this study isn’t enough to convince you of the importance of dividends to the long-term return of stocks, Glen Eagle Trading put out an email today that referenced a recent Wall Street Journal article, titled “Why Investors Are Right to Love Dividends”. The article highlighted the fact that recent studies show S&P 500 dividend-paying stocks returned 9.2% annually over the past 50 years, which is more than double the 4.3% return of non-dividend payers, with lower volatility. Then there is this study by Ned Davis which broke down the contribution of dividends for the 47-years ending December 21, 2019.

Once again, it becomes abundantly clear why investing in companies paying dividends is a terrific long-term strategy. It also begs the question, why do many plan sponsors and their advisors regularly “sweep” income from their equity managers to meet ongoing benefits and expenses? In doing so, instead of structuring the pension plan to have a liquidity bucket to meet those obligations, this activity diminishes the potential long-term contribution to equities from dividends. As longer-term returns are reduced, greater contributions are needed to make up the shortfall compounding the problem.

Please don’t sweep interest and dividend income or capital distributions for that matter, establish an asset allocation that has a dedicated liquidity bucket that uses cash flow matching to secure and fund ongoing benefits and expenses. The remainder of the assets not deployed in the liquidity bucket go into a growth bucket that benefits from the passage of time.

06.26.25
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There Is No “Standard” Exposure

By: Russ Kamp, CEO, Ryan ALM, Inc.

I recently attended a public pension conference in which the following question was asked: What is the appropriate weighting to emerging markets? There may be an average exposure that results from a review of all public fund data, but there is NO such thing as an appropriate or standard weight. Given that every defined benefit plan has its own unique liabilities, funded status, ability to contribute, etc., how could there be a standard exposure to any asset class, let alone emerging markets.

I’m sure that this question originates through the belief that the pension objective is to achieve a return on asset (ROA) assumption. That there is some magic combination of assets and weightings that will enable the pension plan to achieve the return target. However, as regular readers of this blog know, we, at Ryan ALM, think that the primary objective when managing a DB pension plan is NOT a return objective but it is to SECURE the promised benefits at a reasonable cost and with prudent risk.

Pursuing a performance (return) objective guarantees volatility, as the annual standard deviation for a pension plan is roughly 12%-15%, but not success in meeting the funding objective. Refocusing on the liabilities secures, through cash flow matching, the monthly promises from the first month out as far as the allocation will cover. Through this process the necessary liquidity is provided each month, while also extending the investing horizon for the remainder of the assets that are no longer needed as a source of liquidity. We refer to these residual assets as the alpha or growth assets, that now can grow unencumbered.

This growth bucket can be invested almost anyway that you want. You can decide to just buy the S&P 500 index at low fees or construct a more intricate asset allocation with exposures and weightings of your choice. There is no one size fits all solution. We do suggest that the better the funded ratio/status of your plan, the greater the allocation to the liquidity assets. If your plan is less well funded today, start with a more modest CFM portfolio, and expand it as funding levels improve. In any case, you are bringing an element of certainty to what has been historically a very uncertain process.

So, please remember that every DB plan is unique. Don’t let anyone tell you that your fund needs to have X% in asset class A or Y% in asset class B. Securing the benefits should be the most important decision. How you build the alpha portfolio will be a function of so many other factors related specifically to your plan.

06.25.25
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Problem/Solution: Generic Indexes

By: Ronald J. Ryan, CFA, Chairman, Ryan ALM, Inc.

We challenge you to find Pension Liabilities in any Generic Bond Index. We’re confident that you won’t. As a result, we’ve developed an appropriate solution, which we call the Custom Liability Index (CLI).

Pension liabilities (benefits and expenses (B+E)) are unique to each plan sponsor… different workforces, different longevity characteristics, different salaries, benefits, expenses, contributions, inflation assumptions, plan amendments, etc. To capture and calculate the true liability objective, the Ryan team created the first CLI in 1991 as the proper pension benchmark for asset liability management (ALM). We take the actuarial projections of (B+E) for each client and then subtract forecasted Contributions since contributions are the initial source to fund B+E. This net total becomes the true liability cash flows that assets have to fund. We then calculate the monthly liability cash flows as (B+E) – C. The CLI is a monthly report that includes the calculations of:

  • Net future values broken out by term structure
  • Net present values broken out by term structure
  • Total returns broken out by term structure
  • Summary statistics (yield, duration, etc.)
  • Interest rate sensitivity 

We recommend that the Ryan ALM CLI be installed as the index benchmark for total assets, as well as any bond program dedicated to matching assets and liabilities. This action should be the first step in asset allocation. The CLI can be broken out into any time segment that bond assets are directed to fund (i.e. 1-3 years, 1-10 years, etc.). Moreover, total assets should be compared versus total liabilities to know if the funded ratio and funded status have improved over time. If all asset managers outperform their generic index benchmarks but lose to liability growth rate the pension plan loses and must pay a higher contribution.   

Since the CLI is a monthly report, plan sponsors can compare assets versus liabilities monthly. Furthermore, we suggest that there should never be an investment update of just assets versus assets (generic index benchmarks), which unfortunately is common practice today. It is hard to understand in today’s sophisticated finance world why liabilities are missing as a pension index. It should be clear that no generic bond index could ever properly represent the liability cash flows that assets are required to fund. It is apples versus oranges, at a minimum. 

“Given the wrong index benchmark… you will get the wrong risk/reward”

For more info on the Ryan ALM CLI please contact Russ Kamp, CEO at  rkamp@ryanalm.com

06.23.25
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ARPA Update as of June 20, 2025

By: Russ Kamp, CEO, Ryan ALM, Inc.

Despite the chaotic nature of our markets and geopolitics, it is comforting that I can report weekly on the progress being made by the PBGC implementing the critical ARPA legislation. That is not to say, that the 2nd Circuit’s recent ruling isn’t creating a bit of chaos, too.

Regarding last week’s activity, the PBGC’s efiling portal must have been wide open, as they accepted initial applications from 5 pension plans residing on the waitlist. The PBGC will now have 120-days to act on these submissions.

There were no applications approved, denied, or withdrawn last week, but that isn’t to say that the PBGC rested on its laurels. There were two more plans that repaid a portion of the SFA received, as census errors were corrected. International Association of Machinists Motor City Pension Plan and Western States Office and Professional Employees Pension Fund repaid 1.61% and 1.08% of the SFA, respectively. In total, 57 plans have “settled” with the PBGC, including four funds that had no census errors. To date, $219 million was repaid from grants exceeding $48 billion or 0.45% of the grant.

In other ARPA news, another 16 funds have been added to the waitlist resulting from the 2nd Circuit’s determination that previously terminated plans can seek SFA. We do believe that it will prove beneficial for these plans, but it will stress the resources of the PBGC to meet ARPA imposed deadlines.

Given the highly unpredictable nature of war and tariffs on inflation and U.S interest rates, it isn’t surprising that the U.S. Federal Reserve held the Fed Funds Rate steady last week. We encourage those plans receiving SFA grants to secure the promised benefits through a cash flow matching strategy. Who knows how markets will impact bonds and stocks for the remainder of the year.

06.23.25
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$6 billion – Is That All?

By: Russ Kamp, CEO, Ryan ALM, Inc.

A recent ruling by the 2nd Circuit has opened the door for roughly 100+ multiemployer plans to pursue Special Financial Assistance (SFA) that were originally deemed ineligible because the plans had terminated. The PBGC’s inspector general, in a “risk advisory”, has estimated that the cost to provide the SFA to these newly eligible plans could be as much as $6 billion. Is that all? Let’s not focus on the $s, but the number of American workers and their families that this additional expenditure will support.

As I reported last week in my weekly update related to ARPA’s pension reform, the PBGC had denied the application for the Bakery Drivers Local 550 and Industry Pension Fund, a New York-based terminated pension plan, because it had terminated. The plan covered 1,094 participants in 2022 and was 6.3% funded, according to their Form 5500. Regrettably, the plan terminated in 2016 by mass withdrawal after Hostess Brands, Inc., its largest contributor, went bankrupt. However, the court stated, that despite terminating in 2016, the plan “continued to perform audits, conduct valuations, file annual reports, and make payments to more than 1,100 beneficiaries.”

As of June 13, 2025, the PBGC had already received 223 applications for SFA with $73.0 billion approved supporting the retirements for 1.75 million American workers. What an incredible outcome! However, according to the inspector general’s letter, the potential $6 billion in added cost would include $3.5 billion to repay the PBGC’s earlier loans to approximately 91 terminated plans, which was described as a “potential waste”. He went on to state that the potential repayment to the PBGC would be a waste of taxpayer funds due to the positive current and projected financial condition of the multiemployer program. “PBGC’s multiemployer program is in the best financial condition it has been in for many years. PBGC’s 2023 Projections Report states that PBGC’s multiemployer program is projected to ‘likely remain solvent for at least 40 years.’” GREAT!

Perhaps the repayment of $3.5 billion in loans could enable the PBGC to lower the annual premiums on the cost to insure each participant, which might keep some plans from seeking termination due to excessive costs to administer the program. Something needs to be done with private DB plans, too, as those costs per participant are far greater, but that’s a story for another blog post.

As regular readers of this blog know, we’ve celebrated the success of this program since its inception (July 2021). The fact that 1.75 million American workers to date have had their promised benefits secured, and in some cases, restored, is wonderful. Think of the economic impact that receiving and spending a monthly pension check has on their communities. Furthermore, think about what the cost would have been for each of these folks had the Federal government been needed to provide social services. None of these workers/retirees did anything wrong, yet they bore the brunt.

The estimated $6 billion in additional “investment” in American workers is a drop in the bucket relative to the annual budget deficit, which has been running from $1-$2 trillion annually. Restoring and supporting the earned retirement benefits is the right thing to do.

06.20.25
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Why? – Revisited

By: Russ Kamp, CEO, Ryan ALM, Inc.

My 44-year career in the investment industry has been focused on DB pension plans, in roles as both a consultant and an investment manager (I’ve also served as a trustee). I’ve engaged in 000s of conversations related to the management of DB pension plans covering the good, the bad, and even the ugly! I’ve published more than 1,600 mostly pension-related posts on this blog with the specific goal to provide education. I hope that some of my insights have proven useful. Managing a DB pension plan, whether a private, public, or a multiemployer plan is challenging. As a result, I’ve always felt that it was important to challenge the status quo with the aim to help protect and preserve DB pensions for all.

Unfortunately, I continue to think that many aspects of pension management are wrong – sorry. Here are some of the concerns:

  • Why do we have two different accounting standards (FASB and GASB) in the U.S. for valuing pension liabilities?
  • Why does it make sense to value liabilities at a rate (ROA) that can’t be purchased to defease pension liabilities in this interest rate environment?
  • Why do we continue to create an asset allocation framework that only guarantees volatility and not success?
  • Why do we think that the pension objective is a return objective (ROA) when it is the liabilities (benefits) that need to be funded and secured?
  • Why haven’t we realized that plowing tons of plan assets into an asset class/strategy will negatively impact future returns?
  • Why are we willing to pay ridiculous sums of money in asset management fees with no guaranteed outcome?
  • Why is liquidity to meet benefits an afterthought until it becomes a major issue?
  • Why does it make sense that two plans with wildly different funded ratios have the same ROA?
  • Why are plan sponsors willing to live with interest rate risk in the core bond allocations?
  • Why do we think that placing <5% in any asset class is going to make a difference on the long-term success of that plan?
  • Why do we think that moving small percentages of assets among a variety of strategies is meaningful?
  • Why do we think that having a funded ratio of 80% is a successful outcome?
  • Why are we incapable of rethinking the management of pensions with the goal to bring an element of certainty to the process, especially given how humans hate uncertainty?

WHY, WHY, WHY?

If some of these observations resonate with you, and you are as confused as I am with our current approach to DB pension management, try cash flow matching (CFM) a portion of your plan. With CFM you’ll get a product that SECURES the promised benefits at low cost and with prudent risk. You will have a carefully constructed liquidity bucket to meet benefits and expenses when needed – no forced selling in challenging market environments. Importantly, your investing horizon will be extended for the growth (alpha) assets that haven’t been used to defease liabilities. We know that by “buying time” (extending the investment horizon) one dramatically improves the probability of a successful outcome.

Furthermore, your pension plan’s funded status will be stabilized for that portion of the assets that uses CFM. This is a dynamic asset allocation process that should respond to improvement in the plan’s funded status. Lastly, you will be happy to sit back because you’ve SECURED the near-term liquidity needed to fund the promises and just watch the highly uncertain markets unfold knowing that you don’t have to do anything except sleep very well at night.

06.19.25
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Ryan ALM: Problem/Solution

By: Ronald J. Ryan, CFA, Chairman, Ryan ALM, Inc.

Problem:  Pension Liabilities… MIA

Solution:  Cash Flow Matching (CFM)

The true objective of a pension is to secure and fully fund benefits (and expenses) in a cost-efficient manner with prudent risk. Although funding liabilities (benefits and expenses (B+E)) is the pension objective, it is hard to find liabilities in anything that pertains to pension assets. Asset allocation is more focused on achieving a ROA (return on assets target return), and performance measurement compares assets versus assets, as the asset index benchmarks are void of any liability growth calculations. If you outperform your index benchmark does that mean asset growth exceeded liability growth? Perhaps NOT.

Pension liabilities behave like bonds since their discount rate is most similar to a zero-coupon bond yield curve (especially ASC 715 discount rates which are a AA corporate yield curve). Yes, public and multiemployer pension plans use the ROA as the discount rate to price their liabilities but even then it is not shown in any performance measurement reports. In fact, what shows up in the CAFR annual report is the GASB requirement of an interest rate sensitivity test by moving the discount rate up and down 100 basis points to determine the volatility of the present value of liabilities and the funded ratio. But a total return or growth rate comparison of assets versus liabilities seems to be MIA.

Ryan ALM solves this problem through our asset liability management (ALM) suite of synergistic products:

  1. Custom Liability Index (CLI) – The management of assets should actually start with liabilities. In reality, assets need to fund NET liabilities defined as (benefits + expenses) – contributions. Contributions are the first source to fund B+E. Assets must fund the net or residual. This is never calculated so assets start with little or no knowledge of what there job really is. Moreover, B+E are monthly payments, which are also not calculated, as the actuary provides an annual update. The CLI performs all of these calculations including total return and interest rate sensitivity as monthly reports.
  1. ASC 715 Discount Rates – Ryan ALM is one of very few vendors who provide ASC 715 discount rates, and we’ve done so since FAS 158 was enacted (2006). We provide a zero-coupon yield curve of AA corporate bonds as a monthly excel file for our subscribers including a Big Four accounting firm and several actuarial firms.
  1. Liability Beta Portfolio™ (LBP) – The LBP is the proprietary cash flow matching model of Ryan ALM. The LBP is a portfolio of investment grade bonds whose cash flows match and fully fund the monthly liability cash flows of B+E. Our LBP has many benefits including reducing funding costs by about 2% per year (20% for 1-10 year liabilities). The intrinsic value of bonds is the certainty of their cash flows. That is why bonds have always been chosen as the assets for cash flow matching or dedication since the 1970s. We believe that bonds are not performance or growth assets but liquidity assets. By installing a LBP, pensions can remove a cash sweep from the growth assets, which negatively impact their growth rates. We urge pension plan sponsors to use bonds for their cash flow value and transfer the bond allocation from a total return focus to a liquidity allocation. Moreover, the Ryan ALM LBP product is skewed to A/BBB+ corporate bonds which should outyield the traditional bond manager who is usually managing versus an index which is heavily skewed to Treasuries and higher rated securities that are much lower in yield. The LBP should enhance the probability of achieving the ROA by the extra yield advantage (usually 75 to 100 basis points). The LBP should also reduce the volatility of the funded ratio and contributions. In fact, it should help reduce contribution cost by the extra yield enhancement. 

For more info on the Ryan ALM product line, please contact Russ Kamp at  rkamp@ryanalm.com.