Thinking Actuary

Demographic- based Investing is a planned evolution of asset allocation to align with and reduce the risk related to demographic leveraging.  In general, predictable fixed income cash flows are aligned with nearer term payment obligations which can be effectively matched and high risk growth assets are aligned with less predictable and often inflation- or wage-sensitive obligations.  A demographic-based investing approach will become lower risk over time as a pension plan population matures, thereby offsetting the risk increase that happens as a plan population ages.