Contributor: Richard R. Ratkowski, CFA
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20 Years Post PPA: How Your Pension Has Evolved from a Liability to an Asset
Twenty years after the Pension Protection Act, the results are remarkable for many plan sponsors. Funded status has recovered to pre-GFC levels, while funded status volatility has fallen dramatically. What was once an unpredictable balance sheet liability has become, for a growing number of organizations, a strategic asset. In this webinar, we cover the 20-year…
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Beyond a Crystal Ball: What is Investment Skill?
This article broadens investment skill beyond market forecasting to include structuring skill—encompassing engineering, market-making, operational and access capabilities. Learn how allocators can evaluate managers using both qualitative and quantitative frameworks. Key Takeaways: Investment skill extends beyond market forecasting to include structuring skill The four key components of structuring skill include: engineering, market-making, operational and access…
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Clearing Hurdles Without Jumping: The Cost of Low Benchmarks
Hedge funds often use hurdle rates that are low—and often zero—to measure portfolio performance. Moreover, returns above these hurdle rates incur performance fees that can, at times, exceed 20%. At a minimum, we believe hurdle rates should match the prevailing interest rate; otherwise, investors end up paying performance fees for cash returns. If these returns…
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Your Pension: More Than a Liability
Since the 2010s, much has changed with respect to U.S. single-employer defined benefit (DB) plans: plan sponsors are at the highest funding levels seen in decades; a focus on funded status volatility and risk reduction has taken center stage; and changes in regulation allow sponsors greater funding flexibility. Given these changes, it is worth reassessing…
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There’s No Escaping the Cost of Capital!
In higher interest rate environments, derivatives can be just as effective at delivering market exposures. Ultimately, many investors’ concerns about higher rates stem from a decrease in the relative attractiveness of a particular market beta, NOT the synthetic market itself.
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Trend is Generally Your Friend
A Trend Strategy apparently runs completely counter to market efficiency, yet seems to have a rather uncanny ability to not just hold up during prolonged equity drawdowns, but on occasion, positively thrive.
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Strengthen Your Core
A strong core is foundational to overall health and stability, and your investment portfolio is no exception. Cutting out or down on ”excess” (e.g., beta disguised as alpha), while also employing a blend of the right strategies with moderation enhances a portfolio’s risk-adjusted returns. Investors also need to be wary of throwing out effective enhancement…
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Buried Treasure? Funding Post-Retirement benefits made easier under SECURE 2.0
Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act in December 2022 as part of the Consolidated Appropriations Act, 2023. While many provisions impacting both DB and DC plans were included in the legislation, a hard-to-find and often-overlooked provision in SECURE 2.0 extends and enhances plan sponsors’ ability to use assets…
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Exceeding Solvency Expectations for Multiemployer Pension Plans
A new analysis of the Final SFA Rule shows that plans receiving ARPA relief could surpass goals. When the Special Financial Assistance (SFA) provisions were originally published in 2021 by the PBGC as Interim Final Rules, it seemed unlikely eligible multiemployer plans would achieve the intended goal of maintaining solvency through 2051. However, with the…
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LDI Markets in the US & UK – Four Structural Differences to Know
In just eight days, the U.K.’s bond market became so disrupted that the Bank of England (BoE) stepped in to backstop the gilt market on September 28th. Between September 19th and September 27th, 2022, U.K. 30-year inflation-linked bond yields rose from -5 bps to 189 bps, a net change of 194 bps resulting in a…