2020 Public Plan Investment Update and COVID-19 Market Volatility

The brief’s key findings are:

• Despite the market rebound, most public pension plans ended FY 2020 with investment returns that fell short of actuarial expectations.
• Moreover, the March crash raised concerns about the liquidity needs of public plans, which already must sell assets to pay benefits.
• In particular, alternatives are harder to value and more illiquid, which make them a poor option for selling in a downturn.
• However, plans do maintain a cache of Treasuries that could be easily liquidated, so most plans are equipped to weather a sharp downturn.