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September 24th, 2020

America’s Pensions Have Been Shunning Stocks at Their Own Peril

By Gregory Zuckerman and Logan Moore, The Wall Street Journal

Read The Wall Street Journal article

Pension funds and endowments have been shifting away from the U.S. stock market for years. Some are now reconsidering that decision.

Individual investors, including younger traders using apps like Robinhood, have been playing a bigger role in the market lately. They’ve been buying up companies including Tesla Inc., Apple Inc. and other technology shares. Large institutional investors like hedge funds and mutual-fund firms have also been buying, pushing the market higher.

After reaching a bottom on March 23, the Dow Jones Industrial Average is up 44% while the S&P 500 has added 45%.

But pensions have been largely moving away from stocks in recent years, a shift that has hurt performance. The median public pension fund managing at least $1 billion had 46.6% of its portfolio in equities, as of June 30, with just a 21.3% allocation to U.S. equities, according to data analytics provider InvestmentMetrics LLC. By contrast, in 2013, the oldest data available, these funds had invested 52.7% of their portfolios in stocks, with 32.1% in U.S. shares.












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