Risk Overlay Associates LLC
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  • Home
  • What We Think
    • Orphaned Asset Class
    • Negative Correlation
    • Correlation Integrity
  • Contact Us
Funding Status as an Investment Objective

What within an Investment Policy Statement guides a plan's fiduciaries to add or remove risk from the portfolio?

​Looking through Investment Policy Statements you see preservation of principal as being a guiding factor for fiduciaries in considering the level of risk to take with the plan's assets. However, there are few mechanisms for quantifying when fiduciaries should change their asset allocation to favor a preservation of principal.

​We believe that Funding Status should be identified as a central investment objective and incorporated into Investment Policy Statements. Looking back at Funding Status levels since the late 1990's, fiduciaries may have experienced points at which their plan had a funding surplus or was nearly fully funded. Unfortunately, Investment Policy Statements then and now have not identified funding status as a central investment objective and you have seen plans experience funding status declines from continuing to take risk within aggressive asset allocation strategies irrespective of their current ability to meet obligations. 

Hours

M-F:6am - 2pm PDT

Telephone

503-479-5453

Email

info@RiskOverlay.com
 
Risk Overlay Associates LLC is a registered investment adviser in the State of Washington. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD). It explains the characteristics and risks of exchange traded options. http://www.optionsclearing.com/about/publications/character-risks.jsp. For additional information on options and the options marketplace, investors should consider reviewing the following: The Chicago Board of Options Exchange Education Center located at http://www.cboe.com/learncenter/ The NASDAQ Options Trading Guide located at http://www.nasdaq.com/investing/options-guide/