Expected Rates of Return: A Whipsaw Effect?

This session has been archived and is no longer available for purchase. Participants who have purchased archived sessions are still able to access the video and receive credit.

Session Summary: Over the past decade, public pension assumptions for expected rates of investment return have steadily declined given low yields on fixed income and high valuations in equities, which lowered capital market assumptions (CMAs). Today, rising bond yields have altered the trajectory of forward-looking CMAs by increasing expected returns for many asset classes. This new environment leaves public pension stakeholders – investment consultants, plan actuaries, and government entities – with a novel question: what should these recent conditions mean for a plan’s expected return on assets assumption? This session is from the 2024 Trustee School. Content may be dated. 
 
Presenter:
Steve Benjamin, CFA
Partner
Aon
Credits: This course is worth 1.0 GAPPT CEC (Continuing Education Credit). It also qualifies for 0.1 IACET CEU (Continuing Education Unit).
Instructions: Participants must watch the session video presentation and pass the session assessment to earn GAPPT CECs and IACET CEUs.
Prerequisites: None.
Equipment Requirement: Computer, tablet or smartphone and internet access. To avoid issues, please use Google Chrome as your browser.

Course Details

FAQ

In this session, participants will learn to:

  • Discuss how and why forward-looking capital market assumptions have changed.
  • Describe the impact of higher fixed income yields on a public fund’s assumed expected return on assets.
  • Identify the implications for setting an investment strategy.
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