Definition of 'Dedication Strategy'
A method by which the anticipated returns on an investment portfolio are matched with estimated future liabilities. A dedication strategy is frequently used in pension funds and insurance company portfolio to ensure that future liabilities can be met. An institution, such as an insurance company, can estimate future liabilities and try to minimize its outlay to satisfy future liabilities through its anticipated investment earnings.
Also called portfolio dedication, cash flow matching and structured portfolio strategy.
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