- Bonds are back After a decade of chasing yield in risk assets, public pension funds (PPFs) are rebalancing toward fixed income as rising rates restore its appeal.
- Private markets plateau Allocations to alternatives—especially private equity—are leveling off, with liquidity risks and higher rates cooling past enthusiasm.
- Returns diverge widely While average returns remain solid at 6–8%, performance dispersion has increased, spotlighting the benefits of diversification and the importance of making early strategic pivots.
This report is part of a long-running series on asset allocation among public investors – among them PPFs, sovereign wealth funds and central banks. In past reports, we highlighted nascent, later significant, trends such as the shift towards risk assets, driven by a combination of near-zero interest rates and structural diversification trends among global PPFs. In our latest update, we see the beginnings of a pivot in response to a new macro regime as interest rates normalize and risk asset allocations peak.
By Vladimir Gorshkov, CFA, Macro Policy Strategist and Elliot Hentov, Ph.D., Head of Macro Policy Research
Originally published 9/9/2025
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