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Bloodhound Investment Research was formed in 2003 with a focus on how to build and manage superior portfolios based on point-in-time tested long-term investment strategies. We offer a unique approach to stock market investing that's backed up by history. With the Bloodhound Systemâ„¢, you build a... More
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  • Defined Benefits Gap - Revisited 0 comments
    Mar 8, 2013 5:24 PM

    As seen: http://www.bloodhoundsystem.com/blog/index.php/2013/03/db-pension-gaps-revisited/

    Last month, we wrote about the poor nominal returns experienced by the market over the last 12 years. We noted that some of the countries largest pension funds had expected returns on asset well in excess of their actual returns. JP Morgan recently highlighted in a graph the gap that is growing in plans assets and pension obligations. They note the decline in discount rates among major providers, which is another major contributing factor.

    (click to enlarge)

    Unless the major defined benefit (NYSE:DB) plans can quickly recoup the gap through incredible returns on plan assets (which is not likely given the market's expected real return on a blended portfolio of 60/40 equities/bonds, combined with the fact that those plans are only invested 30% in equities), the sponsoring corporations will need to make some additional contributions. That affects cash balances, and earnings as it relates to pension expense.

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  • TLP... Great dividend yield, solid margins, impressive growth and overlooked by institutions... looks like an opportunity!
    Oct 7, 2011
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