Updated with clarification
Investment consultants are on the frontline as interpreters and advisers, talking their institutional clients through managing their portfolios in wildly gyrating global markets.
Pensions & Investments spoke with an array of consultants, all of whom stressed that their first and most important piece of advice to investors is simple: stick to your investment plan.
"In times of uncertainty, you need a plan. This is the time for the plan and it's very important that you follow it no matter what," said Margaret C. Chen, partner and global head of the endowment and foundations practice at Boston-based Cambridge Associates LLC.
Ms. Chen said endowments and foundations are "hunkering down both physically and marketwise" with many employees working remotely in the midst of "a really messy market."
But the primary concern of an endowment or foundation CIO is having adequate liquidity to meet operating expenses, Ms. Chen said.
She stressed that "you need to understand how much liquidity you have within your portfolio and where it resides. Endowments and foundations need to take every possible step to look for low-hanging fruit in their portfolios to provide liquidity."
Cambridge's E&F clients with sufficient liquidity are incrementally allocating small amounts into public equities to harvest gains, Ms. Chen said.
Because endowments and foundations typically have larger allocations to alternative investments than public and corporate defined benefit plans, they have "an anchor to windward," said Richard Nuzum, the New York-based president of Mercer Investments LLC.
Because illiquid assets like private equity, real estate, private credit and infrastructure are marked-to-market with a quarter's lag to liquid asset valuations, that "helps with returns right now," he said.
Mr. Nuzum said defined contribution plan sponsors are hard at work responding to the concerns of their participants. "The faster the employer can engage with and calm down their participants, the better," he said, noting that inquiries to call centers are "way up."
In fact, DC plan participants in both the U.S. and the U.K. have been more actively transferring between investment options since the last week in February, sources said (P&I, March 9 and March 13).
"The silver lining of this market downturn for defined contribution plans is that the majority of participants are invested in target-date funds," said Tracey M. Manzi, vice president, investment services, Cammack Retirement Group Inc., New York, a DC plan consultant.
Ms. Manzi said that among Cammack's clients, "DC plan participants largely are not transacting out of target-date funds and appear to be riding it out."
Ms. Manzi said the firm's DC clients have been touch with Cammack for guidance, but stressed that "market volatility doesn't lead defined contribution plan sponsors to make changes to their investment lineups. They're worried about the impacts of the market downturn on participants, but they designed their investment offerings to provide diversification."