Pensions shift from stocks to discount bonds and private deals – The Average Joe
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    Pensions shift from stocks to discount bonds and private deals

    Noah Weidner

    April 18, 2024

    As bond prices remain low and yields show no signs of picking up soon, investors in the $9T pension market are starting to cash in their stock market gains — and are turning to bonds and alternative investments for safety. Goldman Sachs predicts that pension funds will look to dump $325B worth of equities this year, nearly double the amount from last year.

    • State-managed funds like those in California and New York, as well as private employers like Johnson & Johnson ($JNJ), have trimmed their stock holdings in the first quarter to minimize potential losses from stock market volatility.
    • Managing New York State’s Common Retirement fund, Michael Lombardi explained that the shift towards real estate, private equity, and other markets offers “very slightly higher return[s] for very slightly lower risk.”

    Pension problems: Timothy Braude, managing director at Goldman Sachs, believes the  “move out of stocks bodes well for the long-term health of pension systems” (WSJ). That’s because pensions have struggled to completely meet the funding demands of employees in recent years. But the pivot creates confidence that pensions won’t lose the massive gains they’ve made in the recent bull market — keeping beneficiaries in good hands as they approach retirement.

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