Staying in markets during volatile periods and rebalancing are working for long-term investors like public pension funds, said panelists at the National Institute on Retirement Security conference in Washington on Tuesday.
"Our window is infinity," said Thomas K. Lee, executive director and chief investment officer of the New York State Teachers' Retirement System, Albany. The pension fund took a $30 billion loss after the last downturn, but is now at an all-time high of $115 billion in assets. It has averaged 8.7% returns over the past 25 years, with 83% of dollars coming from investment income, not contributing employers and taxpayers.
For corporate retirement plans that are increasingly shifted to defined contribution plans, which do not offer access to alternatives like private equity, target-date funds offer an approach "if you want to 'DB-ize' the DC system," said Ron Peyton, Callan executive chairman, on the panel.
Stacey Dion, a managing director with Carlyle Group in Washington, said her firm is focusing on getting their strategies in target-date funds, and "is excited about infrastructure because of the long-term nature and job creation."