Plan sponsors can no longer sit back and ignore the 40% of their portfolio that is dedicated to fixed income assets. That was the view of participants at our fixed income roundtable, which featured representatives from the money management and plan sponsor side of the pension industry.
Plan sponsors must rethink their fixed income allocations in the face of historically low interest rates and volatile equity markets. They want their bonds to work harder and add value while continuing to provide around foundation for the pension fund as a whole—kind of like stepping on the gas and the brake at the same time, according to one participant. But for pension funds to fully embrace the host of new opportunities in the fixed income space, it’s going to take baby steps and a lot of board education. Yes, change is on the way—but it’s going to take time.
