Presenter Information

Evan Giusto, University of Wyoming

Department

Department of Finance

First Advisor

Philip Treick

Description

Pension funds have struggled in recent years to adapt to the low yield climate driven by low interest rates and volatile markets. As a result, they have struggled to maintain funding to meet their accrued pension liabilities. In order to meet the growing demands of their liabilities, pension funds have migrated away from low- risk assets towards riskier assets, which have changed the investment composition and risk profiles of these funds. This paper identifies historical pension fund investment allocations and how those have proportionally changed over time. Despite pursuing different and riskier investment vehicles, pension funds continue to struggle to meet their liabilities. Among these risky assets, the focus of this paper will be on private equity and alternative assets. This paper then analyzes the implications and repercussions of investing in such assets, and what this means for the future of pension funds.

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Pension Fund Strategic Positioning

Pension funds have struggled in recent years to adapt to the low yield climate driven by low interest rates and volatile markets. As a result, they have struggled to maintain funding to meet their accrued pension liabilities. In order to meet the growing demands of their liabilities, pension funds have migrated away from low- risk assets towards riskier assets, which have changed the investment composition and risk profiles of these funds. This paper identifies historical pension fund investment allocations and how those have proportionally changed over time. Despite pursuing different and riskier investment vehicles, pension funds continue to struggle to meet their liabilities. Among these risky assets, the focus of this paper will be on private equity and alternative assets. This paper then analyzes the implications and repercussions of investing in such assets, and what this means for the future of pension funds.