Q2 2018 Portfolio Allocation Summary: Shift Away from US Equity in Favor of Other Asset Classes

Investment Metrics Plan Universe Allocation Shifts Summary: 2014 – Q2, 2018

After reviewing 1,400 plans across four plan types within the Investment Metrics (IM) plan universe, we found some interesting changes in asset allocations over a 3 ½ year period (2014 to Q2, 2018). Across most plan types – corporates, publics, and endowments and foundations – we have seen a distinct shift away from US equity in favor of other asset classes.

This comes at a time when the US stock market is on the verge of completing its longest bull run in history. Most plans have either rebalanced their portfolios towards the lower end of their target allocation to US equity or have shifted to global equity instead, diversifying their equity risk.

Corporate plans have aggressively incorporated a liability-driven investing approach in the recent period, demonstrated by the significant increase in their US fixed income allocation. Public plans have used the funds from US equity and placed them into alternatives, primarily private equity, as well as non-US equity.

Meanwhile, endowments and foundations comparatively had the largest increase to non-US equity, this asset class includes global, international, and emerging markets equity portfolios. With increased concerns over inflation, all plan types have increased their allocations to real estate in order to protect themselves from a surge in inflation. What is clear from these shifts in portfolio allocations is many plans are looking to lower the risk in their portfolios.


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