The next evolution of buy and maintain: Expanding the toolkit for a new LDI era

Buy and maintain (B&M) credit strategies have long been a cornerstone of liability-driven investing (LDI), particularly for pension plans approaching their endgame. The strategies’ objective is clear: preserve capital, diversify credit exposure and deliver predictable cash flows aligned with future benefit payments. 

Constructed to match liability duration, these portfolios prioritize long-term credit underwriting over short-term market movements. This low-turnover, research-driven approach has made B&M a natural fit for plans seeking efficient liability matching with a reduced need for alpha. 

Yet the LDI landscape is evolving. As funded levels improve and plans mature, sponsors are rethinking how credit portfolios can support long-term solvency—exploring new sources of return, diversification and efficiency. The key question is now no longer whether to use B&M, but rather how to preserve the core strengths of traditional B&M while evolving it for the next phase of LDI. This is where Enhanced Buy & Maintain enters the picture.  

From traditional B&M to Enhanced B&M 

Traditional B&M portfolios have historically focused on investment‑grade corporate credit—high‑quality, publicly traded bonds selected for their credit worthiness and alignment with liability cash flows. This approach has generally delivered meaningful benefits: reduced transaction costs, insulation from index‑driven forced selling and improved long‑term risk‑adjusted returns.  

However, today’s environment presents new challenges. With spreads compressed relative to history, a narrower opportunity set may limit return potential. Enhanced B&M expands the investable universe while maintaining the same disciplined, hold-to-maturity philosophy.  

Figure 1: The expanded toolkit of Enhanced B&M 

Source: L&G – Asset Management, America. For illustrative purposes only. 

The expanded toolkit, as depicted in Figure 1, includes: 

• Core Credit investment-grade publicly traded corporate debt  
• Securitized constructed from a pool of assets, e.g., CMBS (commercial mortgage-backed securities) and ABS (whole business securitized, auto and credit card-backed securities)  
• Emerging Market Debt investment-grade publicly traded emerging market corporate and sovereign debt 
• Corporate Hybrids investment grade issued by non-financial companies, subordinated to senior debt with embedded call options  
• High Yield sub-investment grade publicly traded corporate debt  
• IG Private Debt investment-grade non-publicly traded private debt (e.g., private placements) 

Each of these sectors potentially offers incremental return potential relative to core investment‑grade credit—without abandoning the fundamental principles of B&M. As a result, Enhanced B&M remains grounded in rigorous credit research, long‑term underwriting and low turnover. But the opportunity set becomes richer, more diversified and more resilient. 

Enhancing outcomes while preserving LDI principles 

We find that incorporating a broader opportunity set can improve portfolio efficiency without compromising the asset-liability match. Figure 2 shows how incorporating US securitized assets and investment-grade private credit to create an Enhanced B&M portfolio introduces additional yield and diversification while maintaining disciplined cash flow alignment. In the illustration, both traditional and enhanced portfolios achieve comparable liability-matching objectives, but an expanded toolkit can potentially improve outcomes. 

Figure 2: An expanded B&M portfolio can potentially improve outcomes 

Source: L&G Asset Management, America, as of December 31, 2025. For illustrative purposes only. Results are based on simulated/hypothetical assumptions and do not represent actual trading or performance. Actual results may differ materially. No representation is being made that any account will achieve results similar to those shown. This material is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell securities. Diversification does not guarantee a profit or protect against loss. The B&M and Enhanced B&M illustrative portfolios shown consist of specific assets identified and selected by L&G - Asset Management, America in each category (with a 20% allocation limit for securitized and IG private credit each), assuming a hypothetical client liability with a 10.6-year duration and a roughly $250 million present value, and were calculated using the Merrill AA Corporate Market Weighted curve. 

A natural next step for endgame portfolios 

In an era where LDI strategies are becoming more sophisticated and forward‑looking, Enhanced Buy & Maintain is not a reinvention of B&M—it is a natural evolution. It maintains the disciplined cash flow management of the traditional approach, but it adds a broader, more diversified set of tools to help plans capture incremental spread and improve long‑term outcomes. It allows plans to maintain the stability they need while accessing the return potential they increasingly require. 

Disclosures

Unless otherwise stated, references herein to "L&G" and “L&G – Asset Management” refer to the global asset management business of Legal & General Group plc. that includes Legal & General Investment Management Ltd. (a U.K. FCA authorized adviser), Legal & General Investment Management America, Inc. (a U.S. SEC registered investment adviser) Legal & General Investment Management Asia Limited (a Hong Kong SFC registered adviser), Legal & General Investment Management Japan KK (licensed by the FAS in Japan), and LGIM Singapore Pte. Ltd. (licensed by the MAS in Singapore). The LGIM Stewardship Team acts on behalf of all such locally authorized entities.

This material is intended to provide only general educational information and market commentary. Views and opinions expressed herein are as of the date set forth above and may change based on market and other conditions. The material may not be reproduced or distributed. The material is for informational purposes only and is not intended as a solicitation to buy or sell any securities or other financial instrument or to provide any investment advice or service. L&G – Asset Management, America does not guarantee the timeliness, sequence, accuracy or completeness of information included. Past performance should not be taken as an indication or guarantee of future performance and no representation, express or implied, is made regarding future performance.

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