How stress testing your portfolio can improve decision making

Prior to the COVID-19 pandemic, investors were concerned about uncertainties in trade, geopolitics and Brexit as well as investment complexities like low returns and market volatility. This demonstrates the reality that threats to a plan sponsor’s ability to meet plan obligations can come in many forms. That said, unexpected swings in funded status are potentially forcing a new view of measuring liability. Simple improvements in pension plan reporting and governance practices can provide better identification and effective management of risk on an enterprise level.

In a recent IFEBP (International Foundation of Employee Benefit Plans) Plans & Trust Magazine article, Kendra Kaake, CFA, explores considerations in assessing downside risk and how plan sponsor can take a more holistic view of plan asset allocation, including enterprise-specific goals, strategic business objectives, risk tolerances, legislative and regulatory impact and return requirements. 

Read the full article here.

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