RT Journal Article
SR Electronic
T1 Playing Defense in a Punishing Market
JF The Journal of Investing
FD Institutional Investor Journals
SP 23
OP 28
DO 10.3905/joi.2002.319511
VO 11
IS 3
A1 Thomas J. Healey
YR 2002
UL https://pm-research.com/content/11/3/23.abstract
AB High equity allocations were a boon for pension funds during the incredibly prosperous 1990s, but the deteriorating markets of the past two years have put many pension funds and endowments in a vulnerable position. Responsible fund managers should now start playing defense. Analyzing how the asset allocation of a typical pension fund today would have fared in five poor equity market scenarios over the past 30 years, the author demonstrates how severe the damage would have been. These results underscore the benefit of a more defensive asset strategy featuring a smaller equity allocation and more alternative investments. A fund structured in this manner could outperform a typical pension fund across a wide range of bear market scenarios.