Lu Wang
December 28, 2015 — 12:00 AM ESTUpdated on December 28, 2015 — 10:32 AM EST
It’s the worst year for asset allocation funds since 1937
A 2.2% gain in the S&P 500 is roughly the best anyone could do
The idea behind asset allocation is simple: when one market struggles, it’s OK because an investor can jump into another that is thriving. Not so in 2015.
In fact, if you judge the past year by which U.S. investment class generated the largest return, a case can be made it was the worst for asset-allocating bulls in almost 80 years, according to data compiled by Bianco Research LLC and Bloomberg. With three days left in 2015, the Standard & Poor’s 500 Index gained 2.2 percent with dividends, cash is up less, while bonds and commodities show losses.
After embracing everything from Treasuries to high-yield bonds and technology shares amid seven years of zero-percent interest rates, investors found themselves with nowhere to run at a time when the Federal Reserve’s campaign of stimulus drew to an end. Normally it isn’t like this. Since 1995, practically every year has seen some asset deliver returns exceeding 10 percent.
“It’s been challenging from the point of view that the equity market and bond market are probably more joined at the hip than normal,” said Hayes Miller, the Boston-based head of multi-asset North America who helps oversee $35.8 billion for Baring Asset Management LLC. “We’ve had high cash exposure relative to norm because we felt cash provides one of the only good diversifiers against the risk-off trade.”
Bianco Research keeps track of the S&P 500, 30-year U.S. Treasury bonds, 3-month Treasury bills and the Thomson Reuters/CoreCommodity CRB Commodity Index to gauge performance in stocks, bonds, cash and commodities. The four are the most common asset classes considered by investors when an allocation strategy is designed, according to Jim Bianco, the founder.
Wonder how the NJ public pension plan will make up the difference between its assumed rate of return of 7.95% and the actual returns running at -1.70% since July 2015 and 2.35% since October 2014? The fund is already down from $80bn in total assets to $74bn as of end-October just on the over $6bn in pension checks mailed to public sector retirees this past year. At this rate the fund will have no assets left in 13 years even though demands on the funds will only explode from here. Time to diminish the benefits.
Get out your check book 7:37 AM.
Nothing worked ?
I gained 12% in my 401K (4% contrbutions from the paycheck) and 21% in my IRA 401K (dividend re-investment)….not a bad year at all.
only after your benefits are diminished by 30% 9:41
Nope 9:41 am, you got that wrong – just because your union masters negotiated a rip-off of taxpayers doesn’t mean taxpayers are constitutionally mandated to pay your health benefits
11:27 you just don’t get it do you, you are going to pay for the mistakes of the people YOU elected who picked your pocket by taking your tax dollars and spending them on things that were a total waste of taxpayer money, I know it, they (politicians) know it, and now you know it. You should consider your increasing taxes a stupid tax because you didn’t care what your elected officials were doing.
Uhhhh, I most certainly did not vote for Sweeney, Sarlo and Prieto. Those goons were bought by your unions 11:38, and now they want to raise my taxes to pay for your benefits. Not a chance – my business will be long gone before they get a cent more.
Yea, the unions are so successful at fixing elections that’s why Barbara Bruno is our governor now…..oh wait she isn’t Christie won a 2nd term, so much for your claims that unions can control the outcome of elections. Your right about your business, once you move your business out of N.J. it will fail and be gone for good…… smart move dummy.
Hey Christie did get my vote and he’s vetoed all tax hikes proposed by your boys Sweeney, Sarlo and Prieto, all made union men.
you’ll be the dummy when the state or whatever municipality that gave you work can’t afford your benefits no more
Actually 1:38 pm I no longer work, I am enjoying the sweet fruits of retirement. My benefits are now cast in stone. So whos the dummy now?
Actually, no I will not be the dummy, I am retired and loving the fruits of my retirement. My benefits are cast in stone. Sorry but your the real dummy.
At least Sweeney, Sarlo and Prieto will accelerate the state bankruptcy filing. If they are the best and brightest NJ has to offer, god help the once great State of NJ. They sound like a combination of Mouseketeers and muppets. Should be fun watching from afar as the unions and politicians scramble to steal as much as they can in the asset stripping that will come without Christie vetoing avery stupid tax hike they propose.
When the money runs out you can crawl back under your stone 1:46
When my 401k goes down my retirement income goes down.
Someone needs to kill the NJ pension system. Divvy up the money as best you can and let the public servents manage it on their own.
1:57, tell us why you deserve a defined benefit pension, i.e. one that is immune from any investment returns by your pension plan at $100K a year instead of a defined contribution 401-k style plan where you save for your own retirement? Why do you deserve a $25,000 platinum health benefit for $480 a year when the rest of us pay much higher insurance premiums for bronze coverage which is standard in the private sector? Why are the rest of us subsidizing those things for you through our taxes?
I don’t have to tell you anything 7:01 am. The fact is I have a defined benefit pension and platinum health benefits . Too bad if you don’t like that. I don’t care about your taxes. I am sure you are way over paid in your chosen profession. Maybe we should look into how much you get paid for the work you do and put your finances under a microscope huh…….
Looks like you shut them up 9:32 am. Good for you.
9:32am said, “I have a defined benefit pension and platinum health benefit. Too bad if you don’t like that. I don’t care about your taxes.” Says it all, really – this pervasive attitude is why NJ is spiraling towards bankruptcy and why residents and businesses are leaving the state. What’s truly sad about your comment is that, in order to keep your benefits status quo, current public sector employees will be downgraded to bronze level health benefits from 2018 so you can keep your platinum level benefits, and all current employees will be shifted to 401-k style defined contribution pension plans going forward.Along with that, NJ state income taxes will increase by 25%, and the consumption tax will increase to 12%, again just to maintain the current status quo for retirees. Good luck!
You are so full of it, Don’t you remember Christie took care of this way back in 2011. All of the problems are solved by providing New Jerseyans Over $120 Billion in Taxpayer Savings by 2041. This comprehensive set of reforms means critical savings for state and local governments and real property tax relief for New Jerseyans.
$79 Billion in State Contribution Savings: Over the next 30 years, the state pension contribution will be $148 billion, a projected savings of nearly $80 billion. Without reform, the state is projected to contribute $227 billion over the same period.
$43 Billion in Local Government Contribution Savings: Over the next 30 years, local government pension contributions will be $70 billion, a projected savings of nearly $43 billion. Without reform, local governments are projected to contribute $113 billion over the same period.
https://www.state.nj.us/governor/news/news/552011/approved/20110628B.html
Hey 1:52AM, you remind me of that nut job Kime. Haven’t you heard Christie fixed everything way back in 2011 whith his landmark pension reform bill, maybe you haven’t heard about it…..It Provids New Jerseyans Over $120 Billion in Taxpayer Savings by 2041. This comprehensive set of reforms means critical savings for state and local governments and real property tax relief for New Jerseyans.
$79 Billion in State Contribution Savings: Over the next 30 years, the state pension contribution will be $148 billion, a projected savings of nearly $80 billion. Without reform, the state is projected to contribute $227 billion over the same period.
$43 Billion in Local Government Contribution Savings: Over the next 30 years, local government pension contributions will be $70 billion, a projected savings of nearly $43 billion. Without reform, local governments are projected to contribute $113 billion over the same period.
you can read more about it here…….https://www.state.nj.us/governor/news/news/552011/approved/20110628B.html
Whoever posted on December 29, 2015 at 10:54 am claims to have gained 12% in their 401K and 21% in their IRA 401K must be flat out lying…. the only way that would have happened is if you had most of your money in just 9 stocks… the FANGs (Facebook, Amazon, Netflix, Google), plus the remaining stocks in the “Nifty Nine” which included Microsoft, Salesforce, Priceline, EBay and Starbucks. But 401K and IRA funds don’t concentrate like that. The broader S&P 500 was flat to down, and cash & bonds weren’t much better. So unless you self-directed the bulk of your IRA and 401K into the FANGS and nifty-nine, I don’t see how you made these returns.
I guess 10:30 am, who is quoting from a dated 2011 report from 5 years ago, has never read the state’s more recent 2015 report on the pension & health benefit crisis? It’s right at the link below, maybe you should read it to educate yourself before posting out of date numbers?
https://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf
10:30 keeps posting dated 2011 numbers, probably to defend his bennys… Too bad the current guys won’t get the same
Oh so your admitting your hero Christie didn’t fix anything 9:21 and 9:30 am? So where did all that saved money go then, did you ever consider that you were fooled, once again, by your elected officials. How dumb can you be? Apparently you are easily fooled and never heard of the saying fool me once shame on you, fool me twice shame on me. You just keep right on believing Christie and his minions and don’t pay attention to the theft of your tax dollars that they are doing behind the curtain, Geesh how dumb can you be?
Did you even read either report 11:41? Those projected savings are by 2041…. in 25 years….
11:41, are you suggesting your hero is Seeeney? Of maybe Sarlo? Or even Prieto? Have you ever heard any of these buffoons speak? If they are the best and brightest NJ has to offer, God help the once proud state of NJ
Ha ha,typical union hack, didn’t even read the report at the link posted…. It’s savings by 2041! We just started 2016….
looks like 11:41 is a fraud….
Ok you posters at 8:12, 8:15 and 8:28 am (who is actually the all posted by the same nut job Kime)
Yes, 8;15 am I read the report – The governor and his pension commission leaders — Tom Healey, a former assistant U.S. Treasury secretary under President Reagan, and Tom Byrne, the State Investment Council chair and former Democratic Party leader — argue vociferously that making the pension payments would require massive tax increases on all New Jerseyans and draconian cuts to school aid and other government services.
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The specter of massive income or sales tax hikes is the “Big Lie” of pension reform. This fear factor is the central tenet of a pension commission dominated by Wall Street finance experts, but lacking in hands-on New Jersey state budget experience.
Your wrong again 8:15 am – The claim in that report is simply not true. In fact, Senate Republicans recently released a seven-year budget based on projections from the non-partisan Office of Legislative Services showing that with normal revenue growth of 3.34 percent a year, the state could ramp up to full funding of the pension system with no new taxes.
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That recommendation ignored the fact the 2011 law already achieved $121 billion in employee and retiree benefit savings over 30 years — an average of $4 billion a year — by requiring public employees to pay thousands of dollars a year more toward their pensions and health benefits, raising the retirement age, and eliminating cost-of-living increases for retirees for decades.
If you don’t think that’s significant, ask someone on Social Security how they would react if Congress tried to eliminate their COLA increase for the next 30 years.
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https://www.nj.com/opinion/index.ssf/2016/01/the_truth_about_njs_pension_crisis_and_how_to_fix.html?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=Wake%20Up%20Call%20N
Did I just hear the arguments of 8:08, 8:12, 8:15 and 8:28 am just get flushed down the toilet?
What a complete ass you are 2:29… With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016. Obviously you are deranged, you seem to be having a conversation with yourself…
12:54, so you’re not in favor of tax hikes to make the pension contributions? Those savings come by 2040…. how do you make up the underfunding now?