FICC Focus Credit Crunch: NISA’s Eichhorn on Alpha and Liability Management
Dec 29, 2025
David Eichhorn, CEO of NISA Investment Advisors, shares insights from his extensive career in fixed income and liability management. He emphasizes that not all excess returns equate to alpha, discussing the importance of proper benchmarking. Eichhorn dives into derivative overlays for liability hedging, the evolution of pension management, and the demand-driven challenges in long credit issuance. He also critiques market interventions and stresses the significance of providing liquidity while navigating structural market risks.
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Early Days: From Academia To Derivatives
- David Eichhorn described joining NISA in 1999 and the firm trading its first derivatives shortly before he arrived.
- He recalled NISA's founders coming from academia and early work on duration and immunization guiding the firm's focus.
Duration Matching Beats Generic Benchmarks
- Immunization means matching asset duration to liability duration to manage interest-rate risk effectively.
- NISA historically used long-duration Treasury strips and still runs those strategies to hedge pension liabilities.
Customize Benchmarks Before Adding Alpha
- Start by customizing the benchmark to reflect the client's goals and true beta exposure before adding active management.
- If a client wants more credit exposure, put it in the benchmark instead of masking beta as alpha.