The saying “the more things change, the more they stay the same” hits the mark as pension allocators continue to put money to work in an environment where they are dealing with the same headlines today as they were at the end of June: FED, inflation, market volatility, and bond prices falling with yields increasing.
Higher current yields continued to help funding status via the discount rate, increasing the Milliman funded index to 106% versus the 104% level they saw in July and making up for small loss in asset values. It is important to note this is the longest stretch we have seen of positive funding status since the onset of the GFC in 2008 and illustrates the impact the interest rate cycles can on funding levels and how pensions allocate to asset classes in general.
The total amount of funds allocated by pension funds in private credit, private real estate, and private equity during July and August was $27.7 billion. This was 25% higher than the run rate we had seen so far during the year and defied the typical slowdown usually seen during the summer months.
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Written By: Gui Costin, Founder, CEO
Gui Costin is the Founder and CEO of Dakota.
February 21, 2023
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