5% Is the New 8% for Pension Funds
For years, many pension funds assumed they would earn an average 8 percent annually from their investments.
It was a reasonable expectation for a while. But times have changed.
Now, the question isn’t whether return expectations should be lower, but by how much. The average target has fallen toward 7.5 percent, but that’s still probably difficult to meet without taking excessive risk.
Howard Marks, the co-founder and co-chairman of asset manager Oaktree Capital Group, threw out a number this week that was markedly lower and challenges models used throughout the pension industry.
Full Content: Bloomberg
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