Additionally, as more baby boomers reach their Golden Years, defined benefit plans are shifting toward more defensive positions to protect assets.
“I think we’re still very much in the growth phase, because a lot of [defined benefits]plans have a lot of risk assets on their books,” Jeffrey Levi, a partner at money management consultant Casey, Quirk & Associates LLC, told P&I. “As we get closer to payouts, you’ll see plans want to move out of equities entirely. At some point, plans want to move to assets that provide very predictable cash flows. I still think we’re years away from that, though.”
Ted W. Noon, senior vice president and director of North American business development, also attributes the rising popularity of low-vol strategies to the desire for investors to diminish risk and the fact that the investment theme has been working.
“These strategies have delivered what they were designed to offer — equity returns at lower volatility than capitalization-weighted equity markets,” Noon told P&I.
For more information on the low-vol strategy, visit our low-volatility category.
Max Chen contributed to this article.