Tag: DB plan investing

Vanguard research explains how CITs and mutual funds are just as beneficial.

“A cap-weighted strategy skews its way toward the largest stocks, but if plan sponsors own equities in a much more balanced way, it will help with stability,” says Bryan Belton, director, multi asset, at PanAgora Asset Management.

Corporate DB plans have experience funded status improvement, and LDI strategies help plan sponsors preserve this; however, investment committees are looking for new asset classes that can provide greater returns at a reasonable level of risk.

As more marketable obligations—such as those for in-pay retirees—are transferred to insurers, residual DB plans will have unusual and idiosyncratic features that make them more difficult to manage, which will drive pension investing to a “hibernation” focus for many, Mercer says.

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.”

“The takeaway is critical: it pays to remain patient,” the researchers wrote.

Mercer offers its list of key priorities for defined benefit (DB) plan sponsors for 2018.