Tag: ai-CIO

So … Is Bitcoin Going to Replace the Dollar?

Mary Pat Campbell

Link: https://www.ai-cio.com/news/bitcoin-going-replace-dollar/

Excerpt:

Bitcoin has been on a roll lately, rising in price five-fold over the past 12 months. Meanwhile, the US dollar, the world’s reserve currency, has lost 9% of its value.

All this has buoyed talk that someday Bitcoin in particular, or cryptocurrency in general, will replace the buck. Well, forget about that, argues St. Louis Federal Reserve President James Bullard, invoking the lessons of pre-Civil War days to warn about the chaos brought by a world of nonuniform currencies—that would be one where the buck isn’t king. 

Appearing on CNBC Wednesday, he predicted that “it’s going to be a dollar economy as far as the eye can see—a dollar global economy really as far as the eye can see—and whether the gold price goes up or down, or the Bitcoin price goes up or down, doesn’t really affect that.”

Author(s): Larry Light

Publication Date: 18 February 2021

Publication Site: ai-CIO

Pension Fund Assets in Largest Markets Rise 11% in 2020

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pension-fund-assets-largest-markets-rise-11-2020/

Excerpt:

Pension fund assets within the world’s 22 largest markets saw double-digit gains for the second straight year in 2020, climbing 11% to $52.5 trillion, according to the 2021 “Global Pension Assets Study” from Willis Towers Watson’s Thinking Ahead Institute.

“In what was a highly tumultuous year, pension funds continued to grow strongly in 2020, underpinned by ongoing multi-decade themes such as the rotation from equities to alternatives and the growth of DC [defined contribution], now the dominant global pensions model,” Marisa Hall, co-head of the Thinking Ahead Institute, said in a statement.

Over the past five, 10, and 20 years, those assets have seen average annualized returns of 8.0%, 6.2%, and 6.1%, respectively, up from 5.3%, 6.5%, and 5.4%, respectively, over the same time periods last year.

Author(s): Michael Katz

Publication Date: 18 February 2021

Publication Site: ai-CIO

Mortgage Securities Deserve a Bigger Place in Pension Portfolios, DoubleLine Says

Mary Pat Campbell

Link: https://www.ai-cio.com/news/mortgage-securities-deserve-bigger-place-pension-portfolios-doubleline-says/

Excerpt:

Collateralized mortgage obligations (CMOs), which are collections of home-loan bonds, have long been a stalwart of insurers. But for other institutional investors, ownership is scant. DoubleLine Capital, the rising fixed-income power, would like to change that.

And it has some interesting research showing that CMOs dedicated to agency-guaranteed bonds, known as mortgage-backed securities (MBS), can book superior performance over time. MBS, of course, are pools of individual mortgages. Those that agencies support—Fannie Mae, Freddie Mac, and Ginnie Mae, chiefly—carry the pledge that Uncle Sam will cover any defaults.

Once-popular non-government-backed mortgage securities, which took a hit in the 2008 financial crisis, have diminished in volume. These so-called “private label” home-loan bonds dropped by half from then to now, to $1 trillion.

Author(s): Larry Light

Publication Date: 18 February 2021

Publication Site: ai-CIO

Growing Number of Pension Funds, Endowments, Foundations Adding Bitcoin to Portfolios

Mary Pat Campbell

Link: https://www.ai-cio.com/in-focus/market-drilldown/growing-number-pension-funds-endowments-foundations-adding-bitcoin-portfolios/

Excerpt:

The number of pension funds, endowments, and foundations adding Bitcoin to their portfolios has steadily risen over the past couple of years as the digital asset has gained more acceptance as an alternative asset.

Two pension funds in Fairfax, Virginia, began investing in late 2018 and 2019 in blockchain technology and Bitcoin through investments in two Morgan Creek Digital funds, which many consider the first investments in the crypto asset from a US pension fund. And a number of hedge funds, family offices, pension funds, endowments, foundations, asset managers, registered investment advisers (RIAs), and banks own Bitcoin outright through Boston-based Fidelity Digital Assets.

The world’s largest asset manager, BlackRock, recently said it is entering into the cryptocurrency business, according to US Securities and Exchange Commission (SEC) filings. BlackRock, which manages  $8.7 trillion, said in its SEC filings that it is seeking to add the Bitcoin futures investments to the BlackRock Global Allocation Fund and the BlackRock Strategic Income Opportunities Fund.

Author(s): Ellen Chang

Publication Date: 11 February 2021

Publication Site: ai-CIO

US Corporate Pension Funded Ratio Climbs to 89.8% in January

Mary Pat Campbell

Link: https://www.ai-cio.com/news/us-corporate-pension-funded-ratio-climbs-89-8-january/

Excerpt:

The funded ratio of the 100 largest corporate defined benefit (DB) pension plans improved to 89.8% at the end of January from 88.1% at the end of December as their aggregate deficit fell below $200 billion for the first time in more than a year, according to consulting firm Milliman.

With the help of a 16 basis point (bp) increase in the monthly discount rate to 2.62% from 2.46%, the plans’ funding improved by $39 billion in January as their aggregate deficit declined to $196 billion from $235 billion due to liability gains incurred during the month.

Author(s): Michael Katz

Publication Date: 17 February 2021

Publication Site: ai-CIO

Everybody Says Higher Interest Rates Are Coming … But When and By How Much?

Mary Pat Campbell

Link: https://www.ai-cio.com/in-focus/market-drilldown/everybody-says-higher-interest-rates-coming-much/

Graphic:

Excerpt:

Absent that nightmare scenario—and most prognosticators believe science can vanquish any of COVID-19’s shape-shifting—the conventional Wall Street wisdom is for better days ahead on both the health and the economics fronts. And since escalating rates are co-dependent on an improving economy, a sunny thesis appears pretty solid.

Historically speaking, low rates like today’s are an aberration. Thus, at some point, it’s reasonable to assume they will return to normal. Or at least to higher than now, to a degree. A new normal that’s hardly towering.

Author(s): Larry Light

Publication Date: 9 February 2021

Publication Site: ai-CIO

Growing Number of Pension Funds, Endowments, Foundations Adding Bitcoin to Portfolios

Mary Pat Campbell

Link: https://www.ai-cio.com/in-focus/market-drilldown/growing-number-pension-funds-endowments-foundations-adding-bitcoin-portfolios/

Excerpt:


The number of pension funds, endowments, and foundations adding Bitcoin to their portfolios has steadily risen over the past couple of years as the digital asset has gained more acceptance as an alternative asset.

Two pension funds in Fairfax, Virginia, began investing in late 2018 and 2019 in blockchain technology and Bitcoin through investments in two Morgan Creek Digital funds, which many consider the first investments in the crypto asset from a US pension fund. And a number of hedge funds, family offices, pension funds, endowments, foundations, asset managers, registered investment advisers (RIAs), and banks own Bitcoin outright through Boston-based Fidelity Digital Assets.

Author(s): Ellen Chang

Publication Date: 11 February 2021

Publication Site: ai-CIO

Tufts University to End Direct Investments into Coal and Tar Sands

Mary Pat Campbell

Link: https://www.ai-cio.com/news/tufts-university-end-direct-investments-coal-tar-sands/

Excerpt:

Tufts University joins the growing number of colleges that have pledged to end direct investments into coal and tar sands companies. The decision comes after a review from an internal school sustainability committee. 

A list of 120 of the largest energy firms will be banned by the $1.9 billion endowment, the university said Wednesday. At the moment, the school has no direct investments into the excluded companies, though the list will be reviewed and updated every year.

Author(s): Sarah Min

Publication Date: 11 February 2021

Publication Site: ai-CIO

House Includes Pension Reform Plan in COVID-19 Relief Bill

Mary Pat Campbell

Link: https://www.ai-cio.com/news/house-includes-pension-reform-plan-covid-19-relief-bill/

Excerpt:

Multiemployer pension plans eligible for the program would include plans in critical and declining status, and plans with significant underfunding that have more retirees than active workers in any plan year beginning in 2020 through 2022. Additionally, plans that have suspended benefits and certain plans that have already become insolvent would also be eligible.

The plans would have to apply for the special financial assistance, and, if approved, the payment made by PBGC would be in the form of a single, lump sum. The amount of financial assistance would be equal to the amount required for the plan to pay all benefits due during the period beginning on the date of enactment and ending on the last day of the plan year ending in 2051. Plans would also be required to invest the amounts in investment-grade bonds or other investments as permitted by PBGC.

Author(s): Michael Katz

Publication Date: 11 February 2021

Publication Site: ai-CIO

Democrats Introduce Bill to Protect Pensions, Expand PGBC’s Power

Mary Pat Campbell

Link: https://www.ai-cio.com/news/democrats-introduce-bill-protect-pensions-expand-pgbcs-power/

Excerpt:

KEY TAKEAWAYS

Bill would create a special partition program that would expand PBGC’s authority.

Pension plans would no longer be able to seek a reduction in benefits under MPRA.

PBGC would begin receiving federal funding and double its maximum guaranteed benefit.

Author(s): Michael Katz

Publication Date: 22 January 2021

Publication Site: ai-CIO

Outlook Improves for Multiemployer Reform in 2021, 2022

Mary Pat Campbell

Link: https://www.ai-cio.com/news/outlook-improves-multiemployer-reform-2021-2022/

Excerpt:

There’s an improved chance Congress will pass legislation over the next year or two to prevent multiemployer pension plans and the Pension Benefit Guaranty Corporation (PBGC)’s multiemployer insurance program from becoming insolvent, according to law firm Morgan Lewis.

In a blog post on the firm’s website, Morgan Lewis Senior Director Timothy Lynch and Partner Daniel Salemi wrote that the biggest factor that could lead to a legislative solution is the fact that the Democratic Party controls the White House and both houses of Congress. They also say the Biden administration may see greater urgency in moving for a solution due to the major economic fallout that would occur if PBGC’s multiemployer program were to become insolvent in 2026, as is currently projected.

Author(s): Michael Katz

Publication Date: 20 January 2021

Publication Site: ai-CIO

Rhode Island Pension Fund Beats Benchmark with 11.9% Return in 2020

Mary Pat Campbell

Link: https://www.ai-cio.com/news/rhode-island-pension-fund-beats-benchmark-11-9-return-2020/

Excerpt:

Rhode Island’s state pension fund rallied at the end of last year, gaining close to $900 million during November and December alone, to end the year up 11.9% net of fees with a record high asset value of just under $9.5 billion.

The record was set just a month after the Rhode Island Pension Fund surpassed the $9 billion threshold for the first time. The fund gained $303 million in December and nearly $573 million in November. The fund outperformed its benchmark, which returned 11.5% for the year, but underperformed a portfolio comprised of 60% stocks and 40% bonds, which returned 13.5%. The program’s annual assumed rate of return is 7%.  

Author(s): Michael Katz

Publication Date: 4 February 2021

Publication Site: ai-CIO