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portfolio dedication

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portfolio dedication
The synchronization of returns on an investment portfolio with known future liabilities. Portfolio dedication applies primarily to investment decisions by institutions such as pension funds and insurance companies. These institutions can estimate future liabilities fairly accurately, then try to minimize the outlay to satisfy the liabilities. Also called dedication, matching.
portfolio dedication
The process of matching returns on a portfolio to future capital outlays. That is, portfolio dedication 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 portfolio dedication, as they have future liabilities that are both large and relatively easy to estimate. Dedicated portfolios often invest in low-risk, investment-grade securities.


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