Aggressively Toe-Dipping, LOL

I’m still in full-on cringe mode after reading this piece in Pensions & Investing about pension fund managers refusing to admit that they’re buying stocks.

They are – but they have to pretend that they’re not so that in hindsight, it won’t look like top-ticking after a huge rally.

The article plays it straight but the subterfuge is hilarious. First, the title:

“Pension funds are unlikely to be part of any big equity push”

Which is hilarious because regardless of what they say, that is exactly what they’re doing – slowly for now.

For example:

“investors are taking short-term tactical advantage of the rising equity premium by, for example, allowing multiasset managers to drift toward the higher end of the equity allocation range.”


Wait, there’s this:

“While some institutional investors with below-average equity exposures are gradually ratcheting up their exposures to publicly held stocks, they represent a minority rather than a majority, consultants said.”

LOL, the same consultants who’ve had their clients underweight equities to begin with.

This is great:

“As spreads come in, they’re shifting back into equities, using swaps and other tools to manage their liability related risks so they have to worry less about their physical bond allocation…But it’s a very gradual shift rather than a rotation.” In other cases, as the outlook for high-yield bonds becomes less attractive, some clients are trimming their high-yield allocation and tilting towards equities “in order to benefit from the potential growth in the economy,”

Right, so replacing the junk bonds they’ve been using as what we call “chicken equity” with actual stocks. That’s a rotation, no?

Wait, one more:

“If we do shift assets out of fixed income due to the historic risk, they will likely wind up elsewhere other than equities,”

Right, into some crack-smoking commodities trading fund or whatever we’re calling “alternative” these days.

Of course, anything but admit to buying stocks.


Pension funds are unlikely to be part of any big equity push (Pensions & Investments)





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