American pension investment portfolios will change drastically as companies respond to pension reform and try to maximize returns while matching liabilities, according to a report.
“Changes in pension policy are being driven by a variety of pressures and these pressures are going to push different plans in different directions,” says Bob Collie, director of strategic advice at Russell and contributing author of the Russell Pension Report 2007.
The report speculates some defined benefit(DB)plans might turn to swap contracts to manage interest rate exposure while others might adopt a much more aggressive strategy, such as long-short investing and global tactical asset allocation.
It also goes on to say that the ability of plans to employ both return-seeking and liability-matching strategies is now more feasible and necessary than ever before, a finding that challenges the traditional presumption that the two strategies are mutually exclusive.
For a synopsis of the report, click here.
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