Canadian Investment Review

U.S. pensions eyeing probability of domestic recession

Written by Staff on Thursday, March 26th, 2020 at 8:00 am

Copyright : serezniy // 123RFU.S. pension plan sponsors see a decent chance of a U.S. recession as a result of the spread of the coronavirus.

Indeed, according to recent a poll by investment consulting firm NEPC, 79 per cent of plan sponsors said they think there’s a 50 per cent or greater chance of recession. And all respondents said they believe there’s at least a 25 per cent chance.

Further, 67 per cent said they think there’s a 25 per cent chance of negative interest rates in the U.S., while 19 per cent said there’s a 50 per cent or greater chance, with 14 per cent saying there’s no chance.

Throughout the turmoil, many investors are staying the course. Just over half (51 per cent) said the market is too volatile to take action at present, while 31 per cent said they’re working on re-balancing to achieve their target positioning. Just seven per cent said they’re raising cash in anticipation of opportunities.

The majority aren’t optimistic about 2020’s return potential for the S&P 500. About two-thirds (63 per cent) said they’re expecting a negative return for the year, while 15 per cent said they expect a loss of more than 10 per cent. Some (37 per cent) said they expect positive returns, while just two per cent are expecting a roaring rebound of more than 10 per cent.

The poll was conducted the week of March 9, 2020. Respondents include corporate and health care pension plan sponsors.

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