Large pension funds have seen impressive gains in their stock portfolios, prompting managers to make strategic adjustments.
Corporate pension funds are reallocating funds towards bonds, while state and local government funds are diversifying into alternative investments. The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the U.S., plans to shift nearly $25 billion from equities to private equity and private debt.
These funds, like other investors, are adapting to a low-yield environment where they can achieve substantial returns on low-risk assets. This shift is influencing market dynamics as investors reassess their risk tolerance. While reducing exposure to stocks may result in missing out on potential gains, holding onto them for too long could lead to price declines.
For pension funds, which have specific return targets to meet future obligations, this adjustment allows them to reduce risk while maintaining th ...
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