Monday, November 24, 2008

Study: Public plans better positioned to recover

Public pension plans are better positioned than other institutions to recover from the worldwide financial market collapse because they rebalance regularly, follow leading peer funds, and keep their long-term strategic asset allocation, Christian E. Weller, associate professor of public policy at the University of Massachusetts, Boston, said today at a teleconference unveiling a study commissioned by the National Institute on Retirement Security.

The study, "In It for the Long Haul: The Investment Behavior of Public Pensions,” examined patterns on how public pension plans reacted in past market crisis, especially the 2000-2001 market downturn, to gauge how they might respond to the current extreme volatility in the markets.

Among the findings, public plans “follow the leader.” Their trustees, CIOs and investment boards “may learn from studying the investment allocation decisions of other plans.” Other research shows “learning from leaders can translate into higher rates of returns.” the study said. The study does not identify leading plans.

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