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J.P. Morgan Predicts Gloomy Year Ahead for Pension Plans

"According to ... J.P. Morgan Asset Management Strategy Group, 2013 is going to be 'grim' for pension funds after a less than jovial 2012. Citing a drop in funded status for many U.S. plans this year, 'despite a 14% stock market rally,' trouble spots are unlikely to disappear any time soon, putting continued pressure on the size of liabilities."

J.P. Morgan Accused of Self-Dealing in Managing Church Trust Fund

"The lawsuit, filed Wednesday in U.S. District Court in Indianapolis, states J.P. Morgan Chase lost money because, as lone trustee for the trusts, the firm purchased more than 177 different investment products, 'mostly from itself, using church funds because they produced the highest revenues to J.P. Morgan, to the detriment of Christ Church.' ... From late 2007 to the end of 2008, the losses brought down the trusts' assets to $27 million from about $39 million.... J.P. Morgan no longer is trustee for the two funds."

A Search for Intelligent Life in the Active Equity Management Universe (PDF)

38 pages. Excerpt: "[O]ver the last five years, the chance of picking outperforming managers has been well over 50% in many investment styles ... Trailing five- and seven-year periods include the financial crisis and global recession, a time during which pairwise stock correlations rose and created greater challenges for some (but not all) investment styles ... [F]or some investment styles, active manager performance has been strongest when overall market returns are weak or rising in single digits ... [The authors] find no evidence that manager outperformance is systematically influenced by the size of a manager's fund."

Low Rates Push More Pension Funds to 'Real Assets'

"A number of pension funds have increased their real asset allocations or hired new real asset managers within the past 12 months.... Defined contribution plan executives who also oversee defined benefit plans ... are looking to add it to DC plans mainly through target-date funds ... J.P. Morgan Asset Management predicts institutional investors will bump up their allocations to real assets to about 25% as they search for income and inflation protection.... Cohen & Steers, Inc. would include global REITs, commodity futures, listed infrastructure, gold and currency such as Australian dollars."

Real Assets' Role in Public Pension Portfolios

"Core real assets have hybrid characteristics, providing the opportunity for a stable, volatility-reducing income stream and potential equity-like upside from price appreciation.... [An] allocation addition of core real assets as small as 5% can significantly enhance portfolio outcomes."

Required Return: A Framework for Setting and Achieving Pension Objectives

"[T]he first step toward success in managing pension portfolios is to clearly identify the plan's ultimate objective (e.g., managing the plan in perpetuity, or partial or full termination) and to translate that objective into a measurable goal ... [This article describes] a required return and surplus volatility framework that can assist plan sponsors in shaping their asset allocations to help them achieve plan objectives."

Breaking the 4% Rule

"A dynamic model adapts withdrawal rates and asset allocations in response to changes in economic and market environments and shifts in personal circumstances. This approach appears to offer greater probability of retirement funding success by measuring the amount of overall satisfaction retirees derive from their withdrawals. Understanding the emotional aspects of investing can help draw meaningful -- if at times counterintuitive -- conclusions about optimal retirement income strategies. Case studies suggest the dynamic framework provides a potentially more even balance between generating and withdrawing enough from portfolio assets to maintain sustainable post-retirement living standards, while avoiding the risk of running out of money."

Pension Defrost: Is It Time to Reopen DB Pension Plans -- or at Least Stop Closing and Freezing Them? (PDF)

18 pages. "Many DB plans are fully funded, in aggregate, and sponsors have developed the expertise to manage pension assets to out-earn liabilities while imposing minimal financial risk.... Commonly used measures of pension risk are flawed, leading sponsors to overstate the benefits of getting rid of their pension plans through pension risk transfer (PRT) transactions, and to understate the potential benefits of maintaining prudently invested plans.... Closing, freezing and terminating plans may offer far less value than the conventional wisdom would suggest."

Safeway Sued by 401(k) Participants Over Target Date Fund Fees

"[T]he plaintiffs said Safeway and Empower Retirement breached their fiduciary duties by selecting a target-date fund lineup managed by J.P. Morgan Asset Management (JPMAM) that 'charged excessive fees as compared to readily available alternatives,' the filing said. JPMAM is not a defendant in the lawsuit.... As of Dec. 31, 2014, the Safeway 401(k) Plan had $1.9 billion in assets, according to the company's most recent Form 5500 filing"

Alternative Investments Gaining Share in Corporate Pension Portfolios, According to New Surveys

Excerpt: Alternative investments, such as hedge funds, private equity, and real estate, are slowly but surely gaining sway with corporate pension fund managers. A recent survey by J.P. Morgan Asset Management of about 150 corporate pension plans found that alternative investments constitute about 11% of their assets, on average, and that the plans intend to increase that allocation to 14% within the next three years.