March 9 marked the 10-year anniversary of the stock market bottoming out in the global financial crisis. The period since has been called the longest bull market in history, but one fueled by cheap debt and significant running room built up during the decline.
Big drop: The S&P 500 fell as much as 55% from its high set on Oct. 9, 2007, not reaching that mark again until March 30, 2012. Over that same period a 60/40* portfolio fell 38% from its last high and recovered on Nov. 3, 2010.
Elusive alpha: Relative to the years before the crisis, active managers have found alpha harder to come by and have had difficulty separating themselves from their peers. This has led many to question their efficacy and look more to cheaper passive options.
The new reality: Both public and corporate pension plans took massive hits in funding during the crisis, with the former slower to recover. In both cases, forward return assumptions are lower than precrisis levels as plans work to meet liabilities.
Risk shift: Many employers have shifted their retirement plan risk to their employees as defined contribution plan growth has outpaced that of defined benefit plans.
*60% MSCI ACWI IMI index, 40% Bloomberg Barclays U.S. Aggregate Bond index. Sources: Bloomberg LP, Morningstar Inc., P&I Research Center, public plan data