FYI: There is such a thing as too much fixed income for corporate pension fund portfolios, new research shows.
As companies have closed and frozen their defined benefit plans en masse, the vast majority have implemented a bond-heavy strategy for liability-drive investing. But shunning riskier asset classes comes at a cost for beneficiaries, according to the recent paper “Should Corporate Pensions Invest in Risky Assets?” by University of Iowa professors Wei Li and Tong Yao, and Southern Illinois University at Edwardsville’s Jie Ying. If plan sponsors can’t handle the volatility of stocks, hedge funds, private equity, and real estate, they should move to a defined contribution plan structure.
Regards,
Ted
https://www.institutionalinvestor.com/article/b1bwj30nh8sznx/The-Case-Against-Boring-Pension-Portfolios
