October 24, 2016
On October 24, Greg Leonberger, director of research, was quoted in a FundFire article on equity risk. The article reported on a public pension fund that is considering cutting its U.S. public equity portfolio by 10% out of concern over potential Black Swan events.
Greg Leonberger Quoted on Equity Risk, Black Swan Events
Greg responded that while concerns about equity risk are common, usually the very maximum cut a pension can afford is only 5%. "You see some slight movements… but we’re not seeing a mass exodus out of public equities out of fear of an upcoming market correction," Greg said. "The funding levels are considerably bad enough that many need to maintain these allocations."
The need for liquidity in a downturn is another factor keeping pensions from exploring other asset classes. "If there’s a market downturn and you need liquidity in your portfolio, private equity can’t provide it," Greg added. "There’s really not a compelling opportunity out there to shift assets towards."
To read the article, visit the FundFire website (subscription required).
For more perspective on U.S. equities, view the recent 3Q 2016 Market Briefing webinar.