Equity prices have strongly recovered since the Great Recession, bringing some benefit to corporate pension funded status, but pension plan sponsors have still faced periods of unprecedented volatility, a prolonged slowdown in global growth, and historically low interest rates.
Willis Towers Watson researchers present various opportunities “outside of traditional hedging assets other than long corporate credit that may be added to [pension funds'] hedging portfolios to help provide a diversifying source of long-term credit premia.”
Morningstar estimates that investors saved more than $4 billion in fund fees in 2017 by continuing to gravitate toward lower-cost funds.
A TDF may invest its assets into index-based securities that do not make tactical adjustments as the markets change—but the act of managing even an index-based portfolio according to a glide path that ramps down equity risk over time will always be at least in part fundamentally “active.”
The report creates a watch list of investment managers that invest millions of dollars in companies that make assault weapons.
A new ETF market analysis from Greenwich Associates shows institutions continue relying on ETFs as “a liquid, fast and relatively low-cost tool in a wide range of tactical tasks,” such as managing cash flows and making nimble changes to their portfolios.
“Portfolio managers and their trading desks primarily choose [investment] instruments based solely on personal experience rather than through an analytical process,” says Kevin McPartland, with Greenwich Associates.
In a new analysis, J.P. Morgan Asset Management describes how equities have not generally come under pressure until the U.S. two-year Treasury rate reaches above 3.5%.
Alexi Maravel, director of Cerulli’s institutional practice, observes that the LDI topic is “probably the most competitive pricing environment among the different types of institutional custom solutions available today.”
Their No. 1 objective for client portfolios is downside risk protection
Despite an ongoing plan sponsor investment unbundling trend, the majority of TDF providers continue to construct their TDF portfolios using proprietary funds as the underlying investments.
Taking a look at the cumulative average account balance changes for consistent 401(k) participants among the full universe of the EBRI/Investment Company Institute (ICI) database, the recent drops are minor in comparison.
“Ultimately, we believe that an active and tactical approach to investing in green bonds may allow investors to better manage risk factors, such as those relating to currencies and rates,” says Yvette Klevan, managing director and portfolio manager/analyst at Lazard Asset Management.
Nearly six in ten pre-retirees and 32% of retirees describe their primary investment strategy as focused on either “aggressive growth” or “moderate growth;” a MassMutual survey finds.
In the past 12 to 18 months, 56% of institutional investors have increased their exposure to focused strategies, defined as 50 or fewer holdings, a survey finds.
State pensions have a history of “talking with their feet” in a show of activism against undesirable products or actions.
Steve Deschenes, product management and analytics director at Capital Group, says, “The active-passive debate is an industry discussion which distracts investors from what can have a real impact on their portfolios.”
One of the most common approaches to valuing managed account services is to compare historical investment performance with a target-date fund or similar benchmark; Empower Retirement argues there is a better approach that involves considering “an alpha-equivalent measure.”
The nation's largest public pension plan has adopted CFA Institute’s Global Investment Performance Standards (GIPS) and says while many asset owners require their investment managers to comply with the GIPS standards, it is less common for asset owners to apply the principles to their own performance reporting to oversight boards, governing bodies and plan beneficiaries.
An open letter penned by Connecticut State Treasurer Denise Nappier presents an articulate defense and endorsement of ESG investing programs—in this case suggesting divestment from gun manufacturers may be in the best long-term financial interest of the state’s pensioners and other stakeholders.