Pension Indicator Updated for January 31, 2017

February 2017: A good start

By: Mike Shebak, Senior Managing Director, Hartland

January was a good start to the year for pension plan sponsors.  Asset prices increased in January as interest rate levels remained essentially unchanged.  This caused pension plan assets to generally grow while pension liability levels were essentially unchanged.

U.S. equity markets extended their rally as earnings have provided support for the post-election optimism, although the rally faded late in the month.  All styles participated in the rally with large cap stocks generating the best returns.  The S&P 500 returned 1.9% whereas small caps as measured by the Russell 2000 only advanced 0.4% after a stellar 2016.

International equity markets jumped out of the gates with a strong January.  Foreign developed equity markets, as represented by the MSCI EAFE Index, returned 2.9% in January while the MSCI Emerging Markets Index returned 5.5%.  After the dollar strengthened in 2016, January saw a modest weakening which aided the itnernational returns in US$ terms.

After a large move during the second half of 2016, rates were virtually unchanged in January.  The 10-year U.S. Treasury yield closed January at 2.45%.  The BarCap Aggregate Index returned 0.2% 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.

January 1, 2017 to Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 1.4% 1.2% 0.9% 0.3%
 Recently Frozen 1.5% 1.2% 0.9% 0.3%
 Ongoing Traditional 1.6% 1.3% 1.0% 0.4%
 Cash Balance 1.5% 1.2% 0.9% 0.3%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 1.4% 1.2% 0.9% 0.3%
 Recently Frozen 1.5% 1.2% 0.9% 0.3%
 Ongoing Traditional 1.6% 1.3% 1.0% 0.4%
 Cash Balance 1.5% 1.2% 0.9% 0.3%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 13.1%  11.1% 9.7% 7.9%
 Recently Frozen 12.1% 10.0% 8.7% 6.9%
 Ongoing Traditional 10.9% 8.9% 7.6% 5.7%
 Cash Balance 13.1% 11.0% 9.7% 7.8%

Frozenmanyyears0117

Recentlyfrozen0117

Ongoing0117

CashBalance0117

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