U.S. Pensions Slash Expectations For Returns, Bank On P.E.

Feb 6 2009 | 12:01am ET

U.S. pension funds are projecting sharply reduced investment returns from major asset classes, including alternatives, through 2013, according to new research from Greenwich Associates.

Overall, more than 1,000 U.S. corporate pension funds interviewed from July to October 2008 said they had reduced investment returns on plan assets to an annual 7.4% in 2008 from 8.2% in 2007, and public funds cut their overall portfolio return expectations to 7.6% from 8.5%.

Both groups expected private equity to generate the highest returns of any asset class over the next five years, with public funds projecting an annual 11.3% return from their private equity investments and corporate funds expecting 10.1%. “It is important to remember the extent to which markets have deteriorated since these interviews were completed in September,” says Greenwich consultant Dev Clifford. “If anything, these expectations for private equity and other asset classes might prove overly optimistic.”

Pension funds have dramatically reduced return expectations for U.S. equities, with projections for annual rates of return dropping to 7.8% in 2008 from 8.6% in 2007 among corporate plans and to 7.9% from 9.1% among public plans. Both groups also cut return expectations on fixed income and pension funds also reported substantial reductions in expected returns on international equity, equity real estate, private equity and hedge funds.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Nicky Hilton To Wed James Rothschild

Aug 20 2014 | 5:23am ET

When it comes to husband-material, socialite Nicky Hilton is sticking with finance...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note