Low interest rates over the last few years have caused investors significant asset allocation problems. The 2022 market reversal has begun to reverse these challenges.
The implications of this return to more normal conditions for investors include:
- The renewed role of fixed income in portfolios
- Greater flexibility to meet performance objectives through simple portfolio structures
- The ability of certain investors to meet return objectives while taking less market risk
- The potential for pensions to take advantage of higher interest rates and likely stronger funded status by pursuing more liability-aware investment strategies