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“> Introduction 4 Fixed income -M FI secuai provide : are (fou. boed) sky v a 1, Diver sification Benefits. Darin motket shess as yenie L. Regwleo cash fos. ( Jadoler bond purdfohso bélances pur ask and ay 3. Iiflahon fedging. if ae Inked ‘bonds rehn Qed wien an L.FI mordeks : vy oo 2) 7 pte maples, ci | Mg cat Hae ed rn ie eS t . Game. as ate oe Fenchmorl | deviahon | Mevintion | 4 = Pot Aeshe Mechanism =| Da = De CF y= CF Ss Match | large % field ate Pecele] shift None ae Heed nny ust hth dev. assumpnomn E rT Taser Rebelancins Frequent aly ti | Trenover | Shuler & - Ther. higher pe a Frlhhe 4 ze cpm =? Wo pre... * Pte indexing is not quel ehetn : ; Al ‘ Tick, Tervest no immua tisk . On ay as index . hetause fade managment cat Linki lity fave of momdate s Ayboid proaches are: : é + anngent immunization hen” port value > DY of Nal, Signs > achye « Horjzon cos 57 fob = we OF ee \ LP pb her oD medi Bad morkel Iiguidi Mrtrix (rey es Lore a) treded bard ) ard hold eek prkr less” lgnid land. Wchve snvestas sell ep tefac ae Fixed meme derjvattves more dgatd 2 mnderlyiy bind. ER = Yield income — Paya) ~ Pees Heng jevecage Tope) tebuen ~ Coot Gh t falldoun tehen = re Jeverased port Pe et eh (ocumes no inferes} hl B= Trt ws = re wn) FT apa -md-A BS Z (ony (ay) Methods df ee ¢ lo NV — Magy fa ib fh 785 (=) + Findwres contract Te ah + Expeck ychahon. agreement fae i component} IS fang gield ) ‘ Halled ingfaument (cope 16-15 lil a x, » Repurchase agreement. c an appre “Fh Bin a ate invest YTM\ gently lending = ae other frche: Such as —-qichness/ cheapness a Lisbili For single fiebil Simplitsd js Buy zero compon Sond. 44 value = ae +z C (ay MD+ MD + Dispersion a+ CF veld) CF pel IS entive pet LKR Decca = Cone py of (Fe spetsion p= (42) * “Sr yep driven and c= Investor's investment hozjzon = Dd (Mca Inerest rele righ is immunized. a assump hn ig : a 5 Vahen |] shift act os tye see ym" piel k VT copemiy ~~ Lae ew » Sammory , immunize single Tcl 1 mniful mvop osset’ x PY & Nels) ACF zield ~4 YiMzero ey rk 1 A. index besed shekyy 2. Mp = Nichi lity's due dete. $. Minimizes the polio convexity This portbhio reyelcly rebalanced ver tre horiven 40” Marrfsin donget Dy Because MD changes ag time passes and as yield “change. Mancyer ~ trade St Gelsieen traksachn cot from Ve bolowerng and allocsing some dita tion p. Slauctete sk teduced 5 Mini midiy dispersion , hom barbell "to billed 2 ysing Cte meosuze stuctuve Usk JS more advan dispersion. fege than wsiny EMT hie tC 7 bpptoache ae ik ee ® devivihve over) é Dedicated assed fibt AHA bends ) Asset BPV + Ng Fabres BPV match closely the ae and CF. = Licbilily portfolio BRV Accontin: hae (Vanish debt Np = SPY, — BPVA % selling HO asset) : BPVr loshin ha constraints phen IE Nf ro , go5s fon patures seouribes awe not sold t meet bligafia) if Mp bx CE>4 @® ducotin matching , Invite parce pid by dager F ptt «cr BPV= MD-V- 0.0001 (18P) ) Fubnes BPV= “BEV cr 1. PVA PYL Ferm 2. RPV APV,, 3. Asset dispersien and carver > dibilty. 4, Reyulerly rebalance - Hf, th = ovethedye futuees (1 => FP if URS waar Phrres lntin a aii MV o asset > flab. siylus > Invested any asset “og. U< theeshold => jmbunizedion Gadde js on, Pursue is vetine a debt By docs cox Bhan more conserva e- ia matching apptoach, pee ‘2 } G years : T years Z years , A Stort pork Date 0 (Nous) Beh tonent- death i mb Bets: mM: 6 Wo mb W 1 M. 6- Wr Bo = ad - ca 4 (797 A 14U = (792 i PBo ae WT se (49 Bm, y tes = mbit 4 A Abo= 1)? -} ‘CesT. meee PRO = pryT ie Tiny (Ateumujated bene fit Hi satim) Projeced bench obligation : 2) Pension asse{-x D-2 Tongox (4 AR HOM 4) Dygo i Peso ~ & —740X - 4) Fi duetes -@ ae hedge xuny Signitieent daily cosh inflows ond addon. ) she siop. — Asel Boy + [np SEEPS] = Lidkilily BV E(Q>Y = Gan Teceive fred swap > select Wa utio [o- 0] Mey mandeled [2s- 752] =D prete at A an alleuckle range . 3. Use. stuphion ("eeeive Pred) 253°" Reteive fried SHEP. fess fe nike pape ph £07 Ser ppp NEO! tr Yo sh ton eZ cast cellar. ecennet Above. 5Y. 8s Joy susp tion i Tad Collar eee nak oat > 8 ‘ : Bond Indexes: . “Steuctweal tisk — (Tuist im yell as Pure jndeyin ¢ Frset convex > Jick convex = )mit Digg . Enhanced i Le « Made] risk. (> mon assumption) « Mecsurement error iE ihn eighte average patho A and L ncfood fetplic GF. + Spreod tusk «Subtle Tsk (SPH VK-10é Hye eau ) : Comber Wk : cpt oF " - Matching D ~ Maley yD) qo D — Match Sy Leightiny expasure to ee ley. sec fet = Medching secta mahaihy co ‘peikts A IM ndex — Matching issue exposure, j a rick. sce tae wale! — etching PY G disitubr Go ~ (Meter becomes exhaus ded inde plays t ue cost jn pure sndey. Bums prlem (Greake alloca =| S- fede Find expense raps HO ALE Fs felerea Peed ek “ee = » Smoke Lets (use ¢ Sing, Pansat Jes 6 a fe: -Laddet vs Bullet Vs Site Lomvex > garbell > Jadder > Bullet. = Wolly => a pght = = Direcl imveshy ajematve .

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