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Today, and over the foreseeable future, a series of events — call them global megatrends — will have a profound impact on the world economy. Each issue of Point of View will share insight into these trends and how the institutional investment community is preparing to address them. |
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DB plan sponsors face myriad challenges: meeting future benefit obligations, controlling the volatility of the plan's funded status and closing any funding gap. As a result, an array of investment approaches such as LDI, immunized portfolios, portable alpha and absolute return strategies are being used to varying degrees by plan sponsors throughout the world.
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Source: Putnam Lovell Strategic Analysis, December 2007
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Investors are seeking greater reporting on ESG issues. Now,
almost four out of 10 companies have adopted reporting
standards developed by the Global Reporting Initiative (GRI),
a not-for-profit network of businesses, civil society and labor
organizations, investors, accountants and others.
“GRI reporting — Aiming to uncover true performance,” a
study by the Social Investment Research Analyst Network,
looked at corporate responsibility/sustainability reporting
from April 2005 through March 2007. Examining the DJ STOXX
Global 1,800 index — a widely watched set of 600 American
companies, 600 European companies, and 600 companies
from the Asia/Pacific region — researchers found:
- 44% (785 companies) issued sustainability reports on ESG
issues. Among the largest 10% of companies in the index,
the figure jumped to 82%.
- The United Kingdom had the highest ESG reporting rate at 67%
of companies studied. Continental Europe was second at 56%,
followed by Japan (47%) and the United States (29%).
- The study found sustainability reports, in general, tended to
be “overweight” in narrative information and “underweight”
in benchmarkable, meaningful data.
Source: Social Investment Research Analyst Network
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Lifecycle and lifestyle funds have become popular
vehicles in U.S. DC plans. Participants wanting to
put their portfolios on automatic pilot find these
funds particularly attractive. Lifecycle funds
rebalance the asset mix as the target date nears.
Lifestyle funds maintain pre-set risk levels.
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Source: “The U.S. Retirement Market, Second Quarter 2007,”
Investment Company Institute |
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Six out of 10 U.S. DC plan sponsors offer plan participants an SRI investment option or plan to do so in the near future.
The SRI options that already exist are overwhelmingly equity-based.
Source: “Defined contribution plans and socially responsible investing in the United States,” a survey by the Social Investment Forum and Mercer Investment Consulting of 65 plan sponsors, 13 plan administrators and 38 financial consultants. |
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