Workshop #6: Trends in Institutional Asset Allocation - What Advisors Can Learn from Institutions

Public pensions are today grappling with how to achieve actuarial returns in a low growth, low interest rate world. Traditional portfolios that rely primarily upon stocks and bonds produced mid-single digit returns over the last decade with uncomfortable levels of volatility. And unfortunately, looking ahead, not much is expected to change with industry return forecasts of 5% to 6% from combined stock and bond allocations, well below the 7.5% to 8.0% actuarial rates for most public pension systems. Our most recent survey of state-wide pension systems uncovers investment trends that potentially address the performance gap and portfolio volatility.

1. Institutions are allocating more toward alternatives.

2. Institutions are reevaluating their strategic asset allocations.

3. Advisors and individual investors can do likewise.