Intech has proudly served public funds since our beginnings. We manage over $US26 billion for public institutions globally (as of March 31, 2018) and we’re humbled by their confidence in us – they average over 9 years with Intech! To serve them best, we’ve always made it a point to understand their challenges and last year we surveyed public funds to uncover those challenges. We found a common theme – navigating tomorrow’s capital markets in the face of funding requirements.
Intech surveyed members of the National Conference on Public Employee Retirement Systems (NCPERS). Our objective was to assess NCPERS members’ current pension plan views, including return assumptions, investing challenges and risk management methods. We conducted in-person interviews of 57 NCPERS members, representing over US$235 billion in plan assets. We summarized the results in a report, “Can You Hide From The “Bogey Man”?”
What Did We Learn?
Like many institutions, public funds face a difficult investment climate today. Over the last couple of decades, public funds have turned to risk-seeking assets to meet their return “bogey.” Now, low interest-rates, low funding levels, modest economic growth and lower expected equity returns are fueling a hard look at portfolios. Risk mitigation is top of mind.
You can learn the details of our findings in the survey report:
- Portfolio return assumptions
- Top investing challenges
- Commonly used risk management tools
Public funds recognize the capital market risks going forward, and many have lowered their return expectations, but they can’t afford to shy away from risk assets given their funding ratios. They need to embrace risk to meet return assumptions while turning to prudent risk management tools. It will be important, however, to make sure those tools complement their investment beliefs, government process and internal skill sets. Balancing these goals will be a prerequisite for success.
