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Pension Indicator Updated for March 31, 2016

March 2016: Market Madness.

By: Mike Shebak, Senior Managing Director, Hartland.

Unlike my NCAA tournament bracket, markets won in March.

Equity markets saw a continuation of the rally that started in mid-February. The S&P 500 finished the month +6.8% and year-to-date through March is +1.3%. Foreign equity markets also experienced a strong recovery in March with developed markets represented by the MSCI EAFE Index returning 6.6%. The MSCI Emerging Markets Index was the best performing equity category returning 13.3% in March.

Treasury rates sold off early in March but rallied after the Federal Reserve reiterated that it would take a slow approach to hiking interest rates. The 10 year U.S. Treasury yield moved up 3 basis points for the month and closed at 1.77%. Most investors came into 2016 expecting higher interest rates but this has not yet occurred as many investors reduced risk amidst the volatile market environment, moving to safety, driving government bond yields even lower.

Credit spreads tightened during the month as market sentiment improved and oil prices appeared to stabilize. This tightening drove corporate bond yields lower which caused pension liabilities to increase ever so slightly. The strong returns out of growth assets helped to increase pension assets during the month leading to improved pension funding levels during the month.

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Information provided in this article is general in nature, is provided for informational purposes only, and should not be construed as investment advice. Performance data represents past performance.  Past performance is not indicative of future results.

July 1, 2015 to Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -4.2% -3.4% -2.0% -0.2%
 Recently Frozen -5.6% -4.9% -3.5% -1.7%
 Ongoing Traditional -7.2% -6.5% -5.1% -3.4%
 Cash Balance -4.6% -3.8% -2.4% -0.6%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 2.3% 1.6% 1.4% 1.0%
 Recently Frozen 1.4% 0.8% 0.5% 0.1%
 Ongoing Traditional 0.5% -0.2% -0.4% -0.8%
 Cash Balance 2.1% 1.4% 1.1% 0.8%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -1.3%  -0.8% 0.0% 1.4%
 Recently Frozen -0.2% 0.3% 1.1% 2.5%
 Ongoing Traditional 0.9% 1.4% 2.2% 3.7%
 Cash Balance -1.3% -0.8% 0.0% 1.4%