FEBRUARY 10, 2025 | PIONLINE.COM | $50 AN ISSUE / $350 A YEAR
The P&I 1000
U.S. plans reap rewards from market surge Peter & Maria Hoey
Assets jumped 16.4%, one of the highest in decades, on the back of big equity, bond returns
In this issue: A look at trends in: ■ Fixed income: Page 16 ■ ETFs: Page 16 ■ Manager diversity: Page 16 ■ Private equity: Page 17 ■ Defined contribution: Page 17
B y Douglas Appell U.S. retirement plans in Pensions & Investments’ latest annual survey reported their strongest gains in three years, even as the portfolio payoff from diversification hit an air pocket and persistent equity market dominance by a handful of U.S. tech giants continued to dog investment teams. For the year ended Sept. 30, the 1,000 largest U.S. retirement plan sponsors saw their combined defined benefit and defined contribution assets surge 16.4% to a record $15.17 trillion, up from a 7.1% gain the year before. It was the best outing for U.S. funds in decades, with the exception of the 16.9% jump for the 12 months ended Sept. 30, 2021. Celebrations for that prior surge, of course, were quickly cut short by the launch of an aggressive rate hiking cycle in March 2022, aimed at quashing inflationary pressures. This time around, some asset own-
A look at asset allocations and returns among the biggest public plans: Page 4 CalPERS CIO Stephen Gilmore’s case for a total portfolio approach: Page 39 Data and graphics begin on Page 14 For the full report, go to pionline.com/ sponsors25
SEE THE P&I 1000 ON PAGE 42
The P&I 1000 Private Credit
The P&I 1000 Regulation
Slowdown? Largest funds boosted their allocations by 57%
American Airlines 401(k) ESG ruling leaves lawyers troubled, perplexed
B y Lydia Tomkiw
$126.2 billion a year prior. Private credit has seen a huge leap in recent Private credit assets show no years from only $26 billion five years signs of slowing down in retirement ago, according to P&I data. The growth in private plans as pension funds concredit assets continued at a tinue building up alloca- The Data tions. Data on funds steady pace, up from the 29% growth seen a year earlier. But chief investment offi- with assets in Many investors began alcers point to concerns over private credit locating to private credit significant growth in the begins on with direct lending allocaspace and new entrants that page 31. tions, said David Scopelliti, haven’t been tested through different market cycles. Credit global head of private markets at Mercer. spreads, too, are tightening. “Like Baskin Robbins, there’s 31 Defined benefit funds of the 200 largest U.S. retirement plans report- different flavors of ice cream … I don't ed $198.4 billion in private credit know if there’s quite 31 different flaassets as of Sept. 30, up 57.2% from SEE PRIVATE CREDIT ON PAGE 42
After a judge issued a 70-page ruling that American Airlines violated federal law in managing two 401(k) plans, the responses among retirement industry members have ranged from troubling to perplexing. All agree that the potential impact remains uncertain on what role ESG policies can play in plans’investment management and how ESG policies are acceptable under ERISA guidelines. “I still find the conclusion — and the rationale — to be a bit of a head-scratcher,” said Nevin Adams, an attorney and former chief content officer for the American Retirement Association. “This judge connected a lot of random dots to get to SEE ESG RULING ON PAGE 37
Martin Allred
B y Robert Steyer
‘HEAD-SCRATCHER’: American Retirement Association’s Nevin Adams
SOUND BITE FRANKLIN TEMPLETON’S CAROLINE BARON:
‘The dramatic increase in its weight in EM is a key reason why investors need to look at Saudi.’ Page 3
Nominate an influential woman today P&I is accepting nominations for the Influential Women in Institutional Investing awards that recognize women who are making an impact. Page 3