Pension Indicator Updated for August 31, 2016

With Summer Ending, Time to Look Ahead

By: Matthew Klein, Principal, Findley Davies, Inc.

Four short months until the end of another year, but certainly four months that will contain plenty of intrigue.  Remember when Labor Day was supposed to be the start of election season?  Feels more like Labor Day 2015 started the election cycle.  Additionally, it looks increasingly likely that the Fed will increase interest rates again soon, although we certainly have heard that line before.

Then, on August 12th, the three major indices all hit all-time highs on the same day for the first time since 1999  Depending on your media outlet, this was either hailed as a great day and optimism for future growth of the economy, or a bellwhether that, with unsustainable price-earnings ratios, everything was about to collapse again just like the dot-com bubble. 

So with all this uncertainty, at least for August, most people were paralyzed from making any major decisions.  Truly, this might have been the most boring month in the nearly six-year history of the Pension Indicator.  Corporate bonds are trading at essentially the same yields as last month across most quality and maturity bands.  On the assets side, regardless of the equity/fixed income mix, we saw almost identical returns for the month, in a very meager 0.1%-0.2% range. 

So with the official end to summer, it's time to get back to school, back to work, and start to figure out how to interpret all this data, known and unknown, in front of us.  It should be an interesting ride. 

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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.

January 1, 2016 to Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -4.6% -3.6% -1.1% 2.2%
 Recently Frozen -8.1% -7.1% -4.7% -1.5%
 Ongoing Traditional -11.8% -10.8% -8.5% -5.4%
 Cash Balance -5.5% -4.5% -2.0% 1.3%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 0.2% 0.2% 0.2% 0.2%
 Recently Frozen 0.1% 0.0% 0.1% 0.0%
 Ongoing Traditional -0.1% -0.1% -0.1% -0.1%
 Cash Balance 0.2% 0.2% 0.2% 0.2%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -1.9%  -1.0% 1.7% 5.6%
 Recently Frozen -5.4% -4.6% -2.0% 1.8%
 Ongoing Traditional -9.2% -8.4% -5.9% -2.3%
 Cash Balance -2.9% -2.0% 0.7% 4.5%

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Disclosure