MATCHING STRATEGY

Acquiring investments by which its payouts will accord an individual or a firm’s liabilities. In this strategy, every investment portfolio is chosen according to an investor’s risk tolerance and pay out requirements. It may comprised of dividends, coupon payments, or principal repayment.

For instance, retirees who are dependent on the income from their portfolio may require continuous and stable payoffs. What the matching strategy would do involves strategically purchasing securities to pay out dividends or interest at regular intervals. A pension would employ the same strategy.