Pension Indicator Updated for July 31, 2017

August 2017: No Whammies...

By: Mike Shebak, Senior Managing Director, Hartland

As a child, my slow summer mornings were spent watching many cheesy TV shows.  One favorite was a game show called, Press Your Luck.  On the show, contestants answered trivia in exchange for spins and a chance to win.  Spinners could land on a prize or the dreaded whammy, and lose all their money.  Hence, it was popular for contestants to plead for “no whammies” while spinning.

By no means am I comparing the recent strong asset returns and improvements in plan funded status to “chance” or “luck”.  Instead, in July, the analogy is to another successful month of “no whammies”.

Markets were positive and long rates remained unchanged or slightly increased: both positive to funded status levels.

So, as we move later into summer, I can hear plan sponsors urging “no whammies” from the equity and interest rate markets in hopes of maintaining their improved funded statuses into the fall and winter.


Second quarter U.S. GDP increased at a 2.6% rate after expanding 1.2% during the first quarter1. The economy accelerated as consumer spending ramped up and businesses invested more on equipment. However, there was little sign of inflation despite a tightening labor market. This puts the Federal Reserve in a tight spot as it looks to normalize interest rates with perhaps an additional rate hike later this year. The Fed communicated its plan to begin shrinking its balance sheet “relatively soon.”

U.S. equity markets continued their momentum with the broad market cap weighted indices producing gains in July, led by large caps. The S&P 500 returned 2.1% whereas the Russell 2000 returned 0.7%.

International equity markets were again clear winners in July. Foreign developed equity markets as represented by the MSCI EAFE Index returned 2.9% in July while the MSCI Emerging Markets Index returned 6.0%.

The U.S. Treasury yield curve steepened modestly during July with the short-end moving down while the long-end moved up slightly. The 2-year U.S. Treasury yield fell 3 basis points to 1.35% while the 30-year U.S.Treasury yield rose 6 basis points to 2.90%1 . The 10-year U.S. Treasury yield closed July at 2.30%, virtually unchanged from June.

1 Bloomberg

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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.

Year to Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 3.9% 3.1% 3.0% 2.3%
 Recently Frozen 2.5% 1.7% 1.6% 1.0%
 Ongoing Traditional 1.1% 0.3% 0.2% -0.4%
 Cash Balance 3.6% 2.8% 2.7% 2.0%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 1.1% 0.8% 0.6% 0.3%
 Recently Frozen 1.1% 0.8% 0.6% 0.3%
 Ongoing Traditional 1.1% 0.8% 0.6% 0.3%
 Cash Balance 1.1% 0.8% 0.6% 0.3%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 16.1% 13.4% 10.8% 6.9%
 Recently Frozen 17.5% 14.7% 12.1% 8.2%
 Ongoing Traditional


16.2% 13.5% 9.6%
 Cash Balance 16.7%


11.3% 7.4%