Pension Indicator Updated for February 29, 2020

This Commentary has been Quarantined

By: Matthew Klein, Principal, Findley

There is one and only one topic I could write about this month, and that would be the virus that some less-educated people think you can contract from a Mexican beer.

Chances are if you are reading this, you are already well aware of what is happening in the financial markets. The 10-Year US Treasury hit its lowest yield in 200-plus years of existence at under 1% yield. The 30-year US Treasury is well under 2% after last month’s antics. The US equity indices are in correction territory. Even at the time of this posting a few days into March, the markets continue to be highly volatile.

As the charts show, it’s quite the range in outcomes depending on your level of liability-driven investing (LDI). If you were sitting around in 2019 and wondering why you were in LDI as the US equity markets were rolling along, this is your answer. Looking at the last 8 months, the volatility is impressive.

If you sponsor an underfunded plan and were looking for the market to help offset future contributions, you are likely quite disappointed at the moment as you probably have lost 10% or more of your funded status.  Chances are, you have at least four months, and likely ten months, left in your fiscal year for this (hopefully short-term) panic to subside.  Once the effects of this latest virus are better known, one would expect the markets to return to normal. 

Our sincere hope is this virus-mania ends up being overblown media hype and the number of contractions and deaths will be minimized by our scientific and health care communities. 

As always, thanks for reading, and drop us a comment on how we're doing.

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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 TypeGrowthBalancedLDI LiteLDI
Frozen (for several years) -10.2% -7.9% -5.1% -1.3%
 Recently Frozen -11.9% -9.6% -6.9% -3.2%
 Ongoing Traditional -13.6% -11.4% -8.7% -5.1%
 Cash Balance -10.6% -8.3% -5.5% -1.8%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) -6.6% -5.1% -3.3% -1.0%
 Recently Frozen -7.2% -5.7% -3.9% -1.6%
 Ongoing Traditional -7.8% -6.2% -4.5% -2.2%
 Cash Balance -6.8% -5.2% -3.5% -1.1%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) -8.7% -5.6% -0.9% 5.2%
 Recently Frozen -13.5% -10.6% -6.1% -0.4%
 Ongoing Traditional
-18.2% -15.5% -11.2% -5.8%
 Cash Balance -9.8% -6.8% -2.1% 3.9%


Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31

Disclosure