March 8, 2016
February 2016 Pension Plan Funding Update
Highlights for February 2016
- Funded status dropped by 1.8% during February, after dropping 4.6% in January. Liabilities (12 yr duration) were up 1.7% in February and Assets (60 ACWI/40 AGG) were down -0.1%.
- Long Credit spreads narrowed by 5 bps and yields rose by 11 bps.
- Corporate credit and government bonds were both positive for the month around 80 bps.
Chart of the Month
- Liabilities have outperformed assets for seven out of the last eight months. The cumulative outperformance by liabilities since May 31, 2015 has been over 10%. The funded status decline is even worse when you factor in that most plans have realized an increase in liabilities due to the adoption of the new mortality tables.
Nick Botticelli, Director, Pension Portfolio Management
Nick is a Director at Hirtle Callaghan in the Investment Strategy Group and the Head of Pension Portfolio Management. Prior to joining, Nick spent over 16 years at Verizon Investment Management Co. serving in various roles. Most recently Nick was the Executive Director of Global Public Assets where he reported directly to the CIO of Verizon Investment Management. Nick was responsible for manager selection and due diligence of $40 billion globally in Global Equities, Global Bonds, Hedge Funds, Currencies and Commodities. In addition, Nick served as one of the three person asset allocation committee deciding on the strategic and tactical direction of the pension plan. Recent large projects included a $7.5 billion pension risk transfer, 401k target date diversification and the addition of liability driven investments to the pension portfolio. Nick was responsible for the public investments in five different trusts including Defined Benefit, Defined Contribution, VEBA’s, Captive Insurance and Foundation. On-going functions of the Global Public Investment team which Nick managed, included evaluation of asset allocation models, funded status, hedge ratio, monitoring of performance, organization structure, risks, compliance, legal agreements, fee structuring, account structure of both existing and prospective portfolios and asset classes. He is a graduate of Pace University.