While pension funds saw very strong investment returns in 2013, both corporate and public pension funds are continuing to revamp their portfolios, according to a study from Greenwich Associates.
Overall assets among 2,400 pension funds, foundations, endowments and Taft-Hartley plans jumped to $9.13 trillion in 2013, up 11% from the previous year, according to Greenwich's 2013 U.S. Institutional Investor study.
Despite the strong returns, many plan executives are continuing to revamp portfolios in reaction to the financial crisis.
“I think they are staying the course (with derisking) even though funding levels improved, even though it was a good year from a return perspective,” said Andrew McCollum, Greenwich Associates consultant, in a telephone interview.
“The scars of the financial crisis are still raw for a lot of people,” he said.
Many among the 1,093 plan executives interviewed by Greenwich for the study have conflicting desires and conflicting needs, Mr. McCollum said.
On the foundations and endowments side, Mr. McCollum said executives were still committed to following the Yale model despite a smaller growth in allocations to alternatives in recent years.
Among the most interesting trends, Mr. McCollum said, is the divergence of overall strategies between corporate and public pension funds. “Public funds are continuing down the path of investing more heavily into alternatives, while corporate plans (are undertaking) various strategies of derisking,” he said.
