A penny is a penny, and a basis point is a basis point. Accumulate enough pennies, and eventually you will have dollars. Save enough basis points, and your defined benefit plan might have a slightly more appealing return. Simple?
Perhaps, but that is the thinking behind an evolving strategy for running pension money that depends on a program of baby steps to reach a better-funded goal.
In the past, the first response of companies facing falling returns has been to reallocate assets into investments with better yields–although presumably with more risk. That was what corporations were attempting to do to varying degrees between 2000 and 2002: When confronted with massive funding shortfalls created by the collapse of the U.S. equity markets, they moved money into hedge funds and private equity.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
- Exclusive discounts on ALM and Treasury & Risk events.
- Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
*May exclude premium content
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
