While we can't predict the future, we can control the price we pay for our investments. With this thought in mind, we believe the time is right for pension funds to consider de-risking their plans by increasing their fixed-income allocations.
1 Milliman Pension Funding Index.
2 FTSE Pension Liability Index discount rate. Source: Society of Actuaries.
3 S&P 500 Index total return of 74.5% from 12/31/18 to 4/30/22.
4 Long-maturity yields below shorter-maturity yields. For example on April 1, the 10-year and the 30-year Treasuries yields traded below the 2-year Treasury yield.
5 Diversification cannot ensure profits or protect against loss of principal.
6 Schroders, "Satellite/Satellite in an LDI Plan: Is the Concept Too Out of This World?"
Important Risks: Investing involves risk, including the possible loss of principal. • Fixed income security risks include credit, liquidity, call, duration, event and interest-rate risk. As interest rates rise, bond prices generally fall. • US Treasury securities are backed by the full faith and credit of the US government as to the timely payment of principal and interest. • Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. • Diversification does not ensure a profit or protect against a loss in a declining market.
The views expressed herein are those of Schroders Investment Management (Schroders), are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. The opinions stated in this document include some forecasted views. Schroders believes that they are basing their expectations and beliefs on reasonable assumptions within the bounds of what they currently know. The views and information discussed should not be construed as research, a recommendation, or investment advice, nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders or Hartford Funds.
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