Jan 13, 2016

U.S. public pension plans and large mutual funds are sheltering more of their holdings in cash than they have in years, a sign of growing stress in financial markets.

A Wall Street Journal Report by Timothy Martin and Sarah Krouse says the increasingly defensive stance reflects investors’ skittishness about global economic growth and uncertain prospects for further gains in assets. Pension funds have the added need to cut more checks as Americans retire in greater numbers, while mutual funds want cash to cover the risk that investors spooked by volatile markets will pull out more of their money.

It’s not unlike the challenges that retirees face with their own portfolios after they retire. The mathematics of making a nest egg last for thirty or forty years is totally different from the job of accumulating a pile of investments over 30 years.
Steady contributions to a 401k can build a investment pile, and there is a huge benefit to contributing during down markets. However, steady withdrawals from a pile can be trouble, especially when withdrawing as markets decline.

Steve and Sinclair review the Journal's statistics and quotes from top pension fund managers. U.S. pension funds now manage over $16 trillion in assets, and have legal obligations to pay income to participants. It pays to know what they are doing with their money for clues about what to do with yours.

In the Q & A segment CFP and Certified Investment Management Analyst Murray Titterington with IQ Wealth joins the A-Team to review the differences between ETFs and ETNs--exchange traded notes.

Steve points out several ETFs that could be positioned well in 2016.