Cash flow matching

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Related to Cash flow matching: Duration matching strategy

Cash flow matching

Also called dedicating a portfolio, this is an alternative to multiperiod immunization that calls for the manager to match the maturity of each element in the liability stream, working backward from the last liability to assure all required cash flows.

Cash Flow Matching

The practice of matching returns on a portfolio to future capital outlays. That is, cash flow matching involves investing in certain securities with a certain expected return so that the investor will be able to pay for future liabilities. Pension funds and annuities perform the most cash flow matching, as they have future liabilities that are both large and relatively easy to estimate. Portfolios that perform cash flow matching usually invest in low-risk, investment-grade securities. The practice is also called portfolio dedication, matching, or the structured portfolio strategy.
References in periodicals archive ?
Market participants can use Deriv/SERV's cash flow matching system to reconcile their payments ahead of the payment date.
Given the rapid growth in the credit default swap market, it has been one of our top priorities this year to establish a central payments database that will streamline the cash flow matching process," said John Stewart, head of Credit Operations Europe at JPMorgan Chase.
From an analytical point of view, BondEdge has all the critical components we look for, including performance attribution, compliance, cash flow matching, what-if scenarios and index analysis.

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