This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Exhibit 1: Despite Strong Asset Returns, Funding Ratios Continue On Their Downtrend Trend In The Second Quarter Of 2014. US Pension Fund Fitness Tracker Of The Typical US Corporate Plan's Funding Ratio. (Graphic: UBS Global Asset Management, Barclays, Markit.)

Stocks in this article: UBS

The UBS Global Asset Management US Pension Fund Fitness Tracker saw the funding ratio of the typical corporate US pension plan drop by approximately one percentage point to 90% in the second quarter of 2014.

"Continuing the downward trend seen in the first quarter of 2014, funding ratios have decreased on average about five percentage points year-to-date," said Robert Guzman, Head of Pension Risk Management at UBS Global Asset Management. "With many equities at all-time highs, we believe it may be prudent for plan sponsors to consider implementing downside protection in their equity portfolios."

Liability values increased 4.6% over the quarter, outpacing the positive investment returns of 3.5%. As a result, funding ratios decreased for the second consecutive quarter. These estimates are based on the average corporate plan’s reported asset allocation weightings from the UBS Global Asset Management Pension 500 Database and publicly available benchmark information.

Building on generally positive economic data in the US over the quarter, the total return of the S&P 500 Index was up 5.23%. Inflation came in slightly higher than forecasted in the US, but this has not yet been viewed as a headwind by the US Federal Reserve (Fed). In the eurozone, deflationary risks led the European Central bank (ECB) to ease monetary policy, using a set of measures that included cutting the deposit rate to -0.10% and extending the Long-Term Refinancing Operation (LTRO). The Monetary Policy Committee of the Bank of England (BoE) voted unanimously to maintain the existing benchmark interest rate, as well as the size of its asset purchase program. It is worth noting the comment made by the BoE Governor, Mark Carney, that rate hikes could happen "sooner than markets currently expect." Geopolitical risks still include instability in Ukraine (although to a lesser extent) and the political violence unfolding in Iraq. In US dollar (USD) terms, the Euro Stoxx Total Return Index was up 2.36% over the quarter. The MSCI Emerging Markets Total Return Index ended the quarter up 6.71% in USD terms.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs