Tuesday, May 31, 2016

Pension Funds Bigger Gambles For Lower Returns Will Drive Their Insolvency

News
The Fed will be forced to raise rates because pension funds and insurance companies are becoming increasingly insolvent in a low rate environment. Pension funds bigger gambles - forays in real estate, junk bonds, and riskier sovereign debt are likely to wreck havoc on solvency during the coming crisis. Few care about these risks today because they're not making headlines. They'll be little room for course correction, preventative measures when they do, and the Fed knows it.



Headline: Pension Funds Pile on Risk Just to Get a Reasonable Return

What it means to be a successful investor in 2016 can be summed up in four words: bigger gambles, lower returns.

Thanks to rock-bottom interest rates in the U.S., negative rates in other parts of the world, and lackluster growth, investors are becoming increasingly creative—and embracing increasing risk—to bolster their performances.


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