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    Corporate Pension Quarterly Q2 2021

    Higher and Higher

    Increasing global vaccination numbers, falling jobless claims, and improving economic prospects helped to propel equity markets to new highs. With interest rates still near historic lows despite increases in 2021 and current valuations levels for public equity markets, many investors may be reviewing their portfolios to improve the likelihood of hitting their long-term return objectives.

    Historical Aggregate S&P 500 Funded Status

    We estimate that, in aggregate, pension asset returns were 2.4% and 6.3% for the month and quarter, respectively.

    Q2_FS_chart_web860x420

    Source: Goldman Sachs Asset Management as of June 30, 2021. Funded statuses reflect monthly estimates with the exception of year-end data. Estimate is based on U.S. plans (where specified) of pension plans within the S&P 500.

    Q&A with Our Team

    Michael Moran

    CFA, Senior Pension Strategist, Goldman Sachs Asset Management

     

    How are plan sponsors using leverage to increase returns?

    Although leverage can be used in several ways, we find that the use of public equity market futures is one of the most common ways that leverage is used to increase expected return.  Equity futures may allow an investor to gain equity market beta with a limited capital outlay which could free up capital for other return-seeking investments. 

    Matthew Maciaszek

    Fixed Income Portfolio Manager, Goldman Sachs Asset Management

     

    Are fixed income derivatives only useful for hedging liabilities?

    While interest rate derivatives are primarily used to hedge liabilities, they can also allow investors to maintain a certain level of duration, therefore freeing up capital to be invested in higher returning assets.

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      Ideas for Investing in a Low Return World

      Capital markets across the globe have rewarded investors considerably over the last decade. Now investors face a scarcity of attractively priced assets and lower return expectations for most asset classes.  Explore how investors may need to modify their portfolios to improve the chance of hitting their long-term return objectives.

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    Corporate Pension Quarterly 2Q21 Disclosures

    Disclosures

    THESE MATERIALS ARE PROVIDED SOLELY ON THE BASIS THAT THEY WILL NOT CONSTITUTE INVESTMENT ADVICE AND WILL NOT FORM A PRIMARY BASIS FOR ANY PERSON’S OR PLAN’S INVESTMENT DECISIONS, AND GOLDMAN SACHS IS NOT A FIDUCIARY WITH RESPECT TO ANY PERSON OR PLAN BY REASON OF PROVIDING THE MATERIAL OR CONTENT HEREIN. PLAN FIDUCIARIES SHOULD CONSIDER THEIR OWN CIRCUMSTANCES IN ASSESSING ANY POTENTIAL INVESTMENT COURSE OF ACTION.

    Please refer to the attached report for important risks additional disclosures.

    The views expressed herein are as of 06/30/2021 and subject to change in the future. Individual portfolio management teams for GSAM may have views and opinions and/or make investment decisions that, in certain instances, may not always be consistent with the views and opinions expressed herein.

    Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

    THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

    Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

    Fixed income investing involves interest rate risk. When interest rates rise, bond prices generally fall.

    High-yield, lower-rated securities involve greater price volatility and present greater credit risks than higher-rated fixed income securities.

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    All rights reserved. Date of First Use: 7/08/2021 245873-OTU-1439450

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