U.S. & U.K. Public Plan Asset Allocation (eVestment)

We take a look at the state of asset allocations through 2019, understanding that global markets are in the midst of a substantial revaluation process, and attempt to quantify the impact COVID-19 has had on U.S. public plans based on public market returns through Q1 and historical asset class correlations.

DOWNLOAD REPORT:   https://info.evestment.com/l/16162/2020-05-08/3sq45z 

Highlights:

• Based on public markets performance through Q1 2020 and asset class correlations seen throughout the financial crisis, we estimate U.S. public plans experienced a drawdown of -14.9% in Q1 2020, or a loss of -$592.8 billion across our sample of defined benefit funds. U.K. plans fared worse with an aggregate return of -19.7% during the quarter, in local terms.
• U.K. plans were allocated to and target a higher public equity exposure than their U.S. counterparts, at the expense of fixed income and alternatives allocations. U.K. plans’ allocation to public equities stood at 55.4% in 2019 against a target of 50.1% and U.S. plans’ allocations of 45.1%. We estimate U.K. public equity allocations are now approximately neutralweight against targets through Q1 2020.
• In the midst of the current stressed environment, we calculate fixed income allocations to be held significantly overweight through Q1 2020; +4.3% versus target allocations for U.S. plans and +1.5% for U.K. plans. While valuations continue to fluctuate, the asset class is most likely to see redemptions to fund rebalancing and opportunistic activities.
• 2020 was looking to be another solid fundraising year for private debt strategies prior to the market volatility in March. Public plans have already made 48 commitments to private debt managers through Q1 2020 and we find an additional 94 ongoing and potential searches as of March 31st, equivalent to 21.7% and 42.5% of CY 2019 completed mandates, respectively.

DOWNLOAD REPORT:   https://info.evestment.com/l/16162/2020-05-08/3sq45z