Cash flow matching(redirected from Cashflow matching)
Also found in: Wikipedia.
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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved