Asset allocations: past, present and future

This presentation will review the changes P&I has seen in pension fund asset allocations, why those changes occurred and a likely direction for the future. The changes in the past five years have been dramatic. Among corporate defined benefit plans, the changes are arguably more dramatic than at any time since railroads created the first pension program in the 19th century. A significant amount of the statistics presented here come from P&I’s annual plan sponsor survey. We have electronic records to the early 1990s, but dusted off print archives to show information to the mid-1980s.

Ford's asset allocation

Ford’s DB plan is a great example of what has been seen in the aggregate. In many ways, Ford has been a leader in asset allocation changes several years ahead of its peers.

One can see in 2006 that Ford started to shift its portfolio into more fixed income and out of equities. In recent years the company accelerated the trend and now is targeting the supermajority of pension assets to fixed income. The remainder is in a growth portfolio that consists of alternative investments and listed equities.