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Corporate pension funds have more assets in bonds than equities for the first time in a decade,...

Corporate pension funds have more assets in bonds than equities for the first time in a decade, a sharp shift from just 5 years ago when the amount in stocks doubled those in fixed income. "A lot of lessons have been learned," says a strategist. Markets have a way of doing that. Will new lessons be taught in coming years?
Comments (12)
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Very very interesting. With LT pension funds being one of the big gorillas in the market and now significantly reducing equity purchases, it is no wonder that equity purchase volumes continue to decline.
    31 Mar 2012, 04:44 PM Reply Like
  • Peregrinus
    , contributor
    Comments (119) | Send Message
     
    Big surprise!! After the 87 crash, the dot com fiasco the housing bubble and two sharp market declines in the last two years, individual investors and pension fund managers are babbling basket cases. As a consequence we now have a bond bubble. When this one bursts it will be a real show! Buy TMV.
    31 Mar 2012, 05:23 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    It now looks to me that the debt bubble will succeed the dot com bubble and the housing bubble. But it will take a while for the bubble to become fully blown ready for bursting..Just a little longer..Till maybe $20T..Getting there...
    31 Mar 2012, 07:06 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5776) | Send Message
     
    Funny how no lesson has been learned. Clearly rotating to a new asset class trading at record levels is the wrong way to play the markets, but even the biggest players in the market repeat those mistakes.
    31 Mar 2012, 09:28 PM Reply Like
  • Tack
    , contributor
    Comments (12721) | Send Message
     
    No, nothing has been learned, apparently. The funds were loaded up in equities at their squeaky peak in 2007, and, now, they're overweighted in bonds, as bond prices map previously uncharted heights.

     

    The results will likely demonstrate a unremarkable similarity in both cases.
    31 Mar 2012, 05:26 PM Reply Like
  • Central Bank News
    , contributor
    Comments (4) | Send Message
     
    It will be very challenging for pension funds to meet benefit obligations while real interest rates are negative. They will either have to put up with unsustainably low rates in lower risk securities, or hunt around in the riskier assets for yield enhancement.

     

    More bad news for the pension industry.
    31 Mar 2012, 05:33 PM Reply Like
  • Furbonacci
    , contributor
    Comments (370) | Send Message
     
    dumb dumb dumb. most pension funds need to earn a minimum of 4.5% per year to maintain solvency. now with rates on bonds being the lowest they have been in history they are overweight? there is going to be a lot of pain and the pensioners don't even see it coming. Rhode Island assumes something like 7.5% return per year, I wonder how they are going to get that buying 10 year treasuries.
    31 Mar 2012, 05:54 PM Reply Like
  • itsAme
    , contributor
    Comments (99) | Send Message
     
    Nothing in the article suggests they are buying treasuries and I would assume they are not. Who cares about a bond bubble if these are mature pension funds? They have made their bed on the yield and will hold to maturity. Seems very reasonable to me
    31 Mar 2012, 08:01 PM Reply Like
  • Furbonacci
    , contributor
    Comments (370) | Send Message
     
    hold to maturity and receive your worthless principal in return. this is ridiculous reasoning. they are guaranteeing their death. why not at least try. yes they are in treasuries, the books are open you just have to look at them. AAA corporate debt isn't yielding 7.5 either. ridiculousness
    31 Mar 2012, 09:19 PM Reply Like
  • bbro
    , contributor
    Comments (9317) | Send Message
     
    Yes stocks will be the place to be and bonds will struggle...
    31 Mar 2012, 06:09 PM Reply Like
  • chopchop0
    , contributor
    Comments (3130) | Send Message
     
    I feel even better loading up on equities the past year :)
    2 Apr 2012, 09:32 AM Reply Like
  • whidbey
    , contributor
    Comments (3391) | Send Message
     
    The sentiment of funds is the message: they do not trust the major market institutions trading equities (and they suspect Congress will not do the right things to lower risk in equities).

     

    Dangerous to damage the confidence of investors in market institutions.
    25 May 2012, 08:41 AM Reply Like
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