Strategic Debt Managementa0211-000063c

Moshav Financial adopts an explicit market risk management approach that evaluates cost and risk of alternative long term debt management strategies

Examines consequences of long term market risk positions
Based on the trade-off between cost and risk, identifies a long term benchmark policy with explicit market risk characteristics.

Long term benchmark based on:

  • Analysis of the cost/risk of a wide range of potential strategies
  • Structural assumptions regarding risk premia and market volatility.


Definitions adopted for cost and risk have a significant influence on the recommended long-term strategy arising from this analysis.

A risk measure based upon volatility in the:

  • Market or economic cost of debt usually results in a minimum risk portfolio that has short duration
  • Volatility of NPV of debt dominate analysis
  • Cash or accounting cost of debt usually results in a minimum risk portfolio that has long duration


Key risk areas in debt management:

  • Sharpe likelihood ratio formulation of risk not intuitive
  • Still need to define acceptable risk
  • Changes to budget debt cost measures with accrual accounting
  • A fiscal environment of surpluses
  • Debt repurchases

*Please note this list is not intended to be exhaustive, if you have questions about risk and your Investments, talk to your financial adviser. Investors should carefully consider the investment objectives, risks, charges and expenses. This and other important information is contained in the Prospectus, which can be obtained from your financial adviser and should be read carefully before investing.