Insights, Strategies and Trends for Public and Taft-Hartley Plans
Public and Taft-Hartley plans have a complex set of investment needs. Plan sponsors must pursue asset growth to meet their liabilities, manage a variety of risks, and navigate distinct regulatory and operating challenges.
Asset allocation is at the center of those efforts. Smart approaches to asset allocation can help optimize portfolios as managers work to balance risk, manage liquidity, minimize costs, and meet liabilities in both the short and long term.
Read on to learn more about strategies, tactics and timely trends to inform your plan’s asset allocation approach
Strategies, Tactics & Timely Trends
Strategic & Tactical Asset Allocation
Strategic asset allocation strikes a balance of asset classes that can help your plan meet its liabilities and manage risk over time for example, seeking to grow its funding ratio by holding a range of return-seeking assets while seeking stability and liquidity in high-quality, frequently traded securities.
Tactical asset allocation takes a more active approach, adjusting allocations to try to capture emerging opportunities or minimize current risks. At SSGA, we believe strategic and tactical asset allocations can work together to improve plans’ results.
Risk Management and Diversification
Rising inflation, volatile interest rates, economic uncertainty: How can public and Taft-Hartley plans manage these risks and others while pursuing the growth they need? Asset allocation strategies can provide these plans with powerful tools to manage risk, mitigate volatility, and grow funded status, while aligning with fiduciary responsibilities.
Liquidity Management
Rising allocations to private assets have cast a spotlight on the need for public and Taft-Hartley plans to ensure liquidity. Many plans are working with providers to develop new, thoughtful liquidity management strategies—boosting their resilience against potential market disruptions.
Finding Growth, Managing Costs
Public and Taft-Hartley funded ratios have improved in recent years. Still, most plans continue to fall well short of full funding—indicating they need to invest in growth strategies to meet their long-term obligations. The need for growth may seem to conflict with mandates to keep costs low, given the traditionally higher costs of alpha-seeking strategies. But plans today can take advantage of a range of solutions to manage costs, even while pursuing growth, through the use of innovative indexing strategies and systematic investment approaches.
Contact State Street Global Advisors for more information about trends and solutions among public and Taft-Hartley pension plans.