US Experiences Dramatic Shift in Asset Allocation
Between 2000 and 2002, US pension funds and endowments/foundations registered dramatic changes in their asset allocations, according to a report by Greenwich Associates. Through changes in portfolio strategies, active rebalancing, asset diminishment or a combination of these factors, funds greatly reduced their investment in domestic equity while proportionally increasing their fixed-income holdings. Although still a small part of overall assets, the move into alternative investments – private equity, hedge funds and equity real estate – has also been dramatic. The report also noted that 2002 saw the continuation of a dismal story for corporate pension funds. Among a sample of 380 large corporate pension funds, total assets declined 14.6 per cent in one year, from $1.35 trillion in total assets to $1.15 trillion.