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Liability-driven investing and glidepath strategies remain popular. More than half (52%) of respondents currently invest a portion of their pension portfolios in liability-driven investing (LDI) strategies. The largest group (17%) allocates between 21% and 30%. Furthermore, the survey found that plans that are 71% to 80% funded have the highest use of LDI strategies (63%); those below 70% funded use LDI strategies the least (29%); and about half (56%) of plans that are 91% to 100% funded are invested in LDIs. Regarding glidepath strategies, 40% of survey participants are either using or currently developing one.The biggest investment challenge of 2012. The low interest rate environment of the U.S. and Canada was the top challenge listed by poll participants. A few named difficulty predicting returns and liability valuation, discouragement in implementing LDI strategies and the negative impact on funding status. The second most common lament was market volatility, making predicting returns and developing funding strategies more difficult. The third most commonly listed challenge was funding requirement and cash contributions. As liabilities are artificially inflated, many organizations are forced to contribute cash to their plans to meet funding requirements. This impacts financial statements and other investments, such as work force expansion or new product launches.The poll was conducted from July to August 2012 and collected responses from 110 U.S. and Canadian executive overseeing corporate pension assets ranging from $25 million to over $1 billion. Forty-eight percent oversee more than $300 million in assets. None of the respondents were institutional clients of SEI.The full survey results are available by emailing seiresearch@seic.com.Kristen Heinzinger
Liability-driven investing and glidepath strategies remain popular. More than half (52%) of respondents currently invest a portion of their pension portfolios in liability-driven investing (LDI) strategies. The largest group (17%) allocates between 21% and 30%. Furthermore, the survey found that plans that are 71% to 80% funded have the highest use of LDI strategies (63%); those below 70% funded use LDI strategies the least (29%); and about half (56%) of plans that are 91% to 100% funded are invested in LDIs.
Regarding glidepath strategies, 40% of survey participants are either using or currently developing one.
The biggest investment challenge of 2012. The low interest rate environment of the U.S. and Canada was the top challenge listed by poll participants. A few named difficulty predicting returns and liability valuation, discouragement in implementing LDI strategies and the negative impact on funding status. The second most common lament was market volatility, making predicting returns and developing funding strategies more difficult. The third most commonly listed challenge was funding requirement and cash contributions. As liabilities are artificially inflated, many organizations are forced to contribute cash to their plans to meet funding requirements. This impacts financial statements and other investments, such as work force expansion or new product launches.
The poll was conducted from July to August 2012 and collected responses from 110 U.S. and Canadian executive overseeing corporate pension assets ranging from $25 million to over $1 billion. Forty-eight percent oversee more than $300 million in assets. None of the respondents were institutional clients of SEI.
The full survey results are available by emailing seiresearch@seic.com.
Kristen Heinzinger
PLANSPONSOR staffeditors@plansponsor.com