Assets of the nation's 1,000 largest retirement plans eked out a roughly 2% gain for the tumultuous 12-month period ended Sept. 30, even as efforts to better position investment portfolios to withstand market volatility continued apace.
According to Pensions & Investments' latest annual survey, the combined assets of the top 1,000 U.S. retirement plans edged up 2.3%, or $148.6 billion, to $6.71 trillion. The largest 200 plans, meanwhile, saw their assets climb 1.7% to $4.965 trillion.
The modest gain for the top 1,000 followed the previous survey's 8% rebound from two years of declines — -5.2% for the year ended Sept. 30, 2009, and -13.1% for the year ended Sept. 30, 2008 — after and during the global financial crisis.
By any measure, the recovery of retirement plan assets from the economic and financial debacle of 2008 is looking pale when compared to the one that followed the bursting of the technology bubble at the start of the prior decade. Retirement plan assets enjoyed double-digit gains in four of the five years through September 2007, with the one exception — the 8.4% advance for the 12 months ended Sept. 30, 2006 — still stronger than anything seen so far this time around.
The latest tepid showing is, in part, a matter of timing, with the survey's snapshot of asset levels being taken at a post-crisis low point for capital markets. For the quarter ended Sept. 30, the Russell 3000 benchmark for U.S. stocks tumbled 15% and the Morgan Stanley Capital International All-Country World index plunged 17%, even as a collapse of 10-year U.S. Treasury yields to 1.92% from 3.16% during the same period was swelling the present value of pension liabilities.
Markets have recovered strongly since then, with P&I estimating a rebound in top 1,000 retirement assets of more than $476 billion from Oct. 1 through Jan. 31, 2012.
For the latest survey period, the Russell 3000 delivered a meager 0.55% gain for the year ended Sept. 30, while the MSCI ACWI suffered a 5.54% drop and the Barclays Capital Aggregate bond benchmark rose by 5.26%.
That market backdrop left overall pension assets treading water, with 60 of the Top 200 retirement plans reporting results that ranged from a 2% decline for the year to a 2% gain.
Continued efforts to reduce equity exposure in favor of greater allocations to alternatives strategies, and growing interest in liability-driven investing, were leading themes last year, said Kevin Turner, Seattle-based managing director of consulting with Russell Investments.