Maintaining Target Allocations: Effects on Plan Performance

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The brief’s key findings are:

  • Pension plans set target asset allocations, but allow actual allocations to vary within range of the targets.
  • From 2001-2017, target allocations shifted away from traditional stocks and bonds and toward alternatives.
  • As a result, many plans were net sellers of equities during the financial crisis, which locked in losses and partially excluded plans from the subsequent rebound.
  • Most plans stayed relatively close to their target allocations over the period, but a looser approach within the target ranges would have only improved performance modestly.