At a recent NeuGroup for Pension and Benefits VIS sponsored by BNY Mellon/Insight Investment, members discussed the ups and downs of management over the last few months.
Members have experienced many layers of challenges due to the economic and market impact of the COVID-19 Pandemic, and those with pension plans were not immune. Moreover, the pension investment portfolios did not behave as anticipated in this crisis, making rebalancing even more of an issue than normal.
Moderators from NeuGroup and Insight Investment opened the session, our second VIS of August (the first [link to it] covered working capital management), by setting the scene for what has been a challenging time to be a pension portfolio manager in light of the volatility and mixed liquidity across various asset classes.
- “This is an interesting topic because 2020 has caused swings in asset prices which caused folks to be outside their target range.” said Kevin McLaughlin from Insight Investment. “This made rebalancing necessary. Folks were in a dilemma: trade and the cope with the cost, or hold off and wait for better conditions.”
The unique aspect of this session was the different background of the members presenting their rebalancing approach.
- One had taken over the role of managing pension investments just before the on-set of the crisis, so he had ramp the learning curve quick while also taking fresh look at assumptions, during a period when few traditional assumptions about diversification and portfolio hedging held.
- The other was a pension investment manager with longer experience in the role, who had overhauled his company’s approach over the last several years.
As they came to similar conclusions on what actions to take, key takeaways and follow-ups for the future, this provided peer validation that those new to the role, yet experienced with the markets, can thrive in the pension investment manager chair.
- Interactive poll questions provided opportunities for meeting participants to share their responses to the economic crisis as well, with topics ranging from their current pension plan status to whether they have taken advantage of an asset overlay to aid rebalancing efficiency.
Visit NeuGroup Insights to learn more about these members’ successes, disappointments and projections for the future.