Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
April 18th, 2018
Benefits & Administration
Study Finds Different Paths for Corporate and Public Pensions
A global survey of 300 pension funds explores the commonalities and differences between corporate and public-sector defined benefit (DB) plans and finds corporate plans are winding down as public plans are strengthening themselves for the long run. The survey, which was conducted for BlackRock by the Economist Intelligence Unit, reveals nine out of ten public DB plans in the study are open to new members, but only about one in ten corporate plans is. In addition, nearly three-quarters of corporate plans overall say they are de-risking, but the proportion rises above 80% for U.S. plans. Among public DB plans, size is correlated with change on several important fronts, with larger plans (those with more than $25 billion in AUM) more likely to have added staff and revised board and staff roles than plans with less than $10 billion in assets under management (AUM). Read more >
Investing
Market Guide Considers Pressing Inflation, Yield Curve Questions
Recent market volatility demonstrated that institutional investors are fully alert to the risks posed by higher inflation, according to the latest Guide to the Markets report from J.P. Morgan Asset Management (JPAM). “One strong wage print in the U.S. jobs report for January sent equity and bond investors running for cover—and the sensitivity is understandable,” researchers observe. “Higher U.S. wage inflation would cause the Federal Reserve to tighten monetary policy faster than expected, having implications for the wider economy and equity markets. However, we expect wage acceleration to be moderate, leading the Fed to raise interest rates another three times this year, only once more than the market expects.” Mike Bell, global market strategist for JPAM, hastens to add that interest rates aren’t anticipated to pose a problem for the economy or equity markets this year. “Instead, financial stocks should benefit,” Bell says. Read more >
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Economic Events

Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,319,000, the Census Bureau announced. This is 1.9% above the revised February estimate of 1,295,000 and is 10.9% above the March 2017 rate of 1,189,000. Single-family housing starts in March were at a rate of 867,000; this is 3.7% below the revised February figure of 900,000. The March rate for units in buildings with five units or more was 439,000.

Market Mirror

Tuesday, the Dow gained 213.59 points (0.87%) to finish at 24,786.63, the NASDAQ closed 124.81 points (1.74%) higher at 7,281.10, and the S&P 500 increased 28.55 points (1.07%) to 2,706.39. The Russell 2000 was up 16.77 points (1.07%) at 1,579.80, and the Wilshire 5000 climbed 302.55 points (1.09%) to 28,099.65.

The price of the 10-year Treasury note was up 2/32, decreasing its yield to 2.821%. The price of the 30-year Treasury bond increased 11/32, bringing its yield down to 3.010%.

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Products, Deals and People
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Ask the Experts
Record Retention for Governmental 403(b) Plans
“It is my understanding that retirement plans under the Employee Retirement Income Security Act (ERISA) are required to keep documents necessary to determine benefits as long as needed for benefit determination. Is this true for a governmental retirement plan?” Read more >
From the Magazine
DB Focus: Trends in Risk Assets
Since 2006, when the Pension Protection Act (PPA) motivated corporate sponsors to increasingly focus on their defined benefit (DB) plans’ funded status, investment portfolios have taken on higher proportions of bonds as a hedge for pension obligations. While corporate plans have made progress, aggregate funding levels still hover around 80%, meaning many plans still have to invest or contribute their way to full funding. Accordingly, the asset allocation of DB plan portfolios is still about half return-seeking assets, and most of that is public equities. Read more >
Small Talk
More workers—especially those from younger generations—see rewards in job hopping than before, according to research from global staffing firm Robert Half. Sixty-four percent of professionals polled think changing roles every few years can be beneficial, with the biggest perk being a higher salary. The biggest drawback of job hopping, cited by 46% of workers, is being perceived as a flight risk. And this is a valid worry, as a survey of chief financial officers (CFOs) found 44% are not at all likely to hire a candidate with a history of job hopping. Read more >

ON THIS DATE: In 1775, American revolutionaries Paul Revere, William Dawes and Samuel Prescott rode though the towns of Massachusetts giving the warning that the Regulars were coming out. In 1838, the Wilkes’ expedition to the South Pole set sail. In 1906, San Francisco, California, was hit with an earthquake. The original death toll was cited at about 700. Later information indicated that the death toll may have been three to four times the original estimate. In 1923, Yankee Stadium opened in the Bronx, New York. The Yankees beat the Boston Red Sox 4-1. In 1924, Simon and Schuster, Inc. published the first “Crossword Puzzle Book.” In 1934, the first Laundromat opened in Fort Worth, Texas. In 1938, Superman made his debut when he appeared in the first issue of Action Comics. (Cover date June 1938). In 1946, the League of Nations was dissolved. In 1950, the first transatlantic jet passenger trip was completed. In 1985, Tulane University abolished its 72-year-old basketball program due to charges of fixed games, drug abuse, and payments to players. In 1999, Wayne Gretzky (New York Rangers) played his final game in the NHL. He retired as the NHL’s all-time leading scorer and holder of 61 individual records.


WEDNESDAY WISDOM:
“Advice is like snow—the softer it falls, the longer it dwells upon, and the deeper it sinks into the mind.”—Samuel Taylor Coleridge, English poet

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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