NEW YORK,
May 5, 2016
/PRNewswire/ -- According to the BNY Mellon Institutional
Scorecard, which is available online
here, the funded status of typical U.S.
corporate defined benefit (DB) plans fell by 0.3 percent in April,
to 79.9 percent. After a slight increase in March, the funded
status of Corporate DB plans has now fallen five out of the last
six months, since closing the month of October, 2015 at 84.7
percent.
Over the course of April, liabilities grew by 1.6 percent,
which outpaced a modest 1.2 percent return in assets. Corporate
discount rates fell by 9 basis points in April, to 3.91
percent—which led to much of the 1.6 percent gain in liabilities.
On the year, assets are now up 4.4 percent, but remain behind
liabilities, which are up 9.1 percent.
According to BNY Mellon estimates, the S&P 500 pension
deficit is estimated to have increased by $13 billion in April, to $436 billion.
"Plan sponsors have seen strong asset growth over the past
two months, but it has unfortunately been masked by a steady rise
in liabilities," said Andrew
Wozniak, head of BNY Mellon Fiduciary Solutions. "Early in
the year, wider credit spreads were providing relief on the
liability side by elevating corporate discount rates. This has
reversed over the past two months with significant tightening of
credit spreads resulting in a 30 basis point drop in the discount
rate. Periods like this demonstrate the importance of having
the appropriate level of credit spread exposure within LDI
strategies."
In April, public DB plans and endowments & foundations
both beat their respective return targets.
Public DB Plans' target of excess returns over a 7.5
percent annual return was exceeded by 0.62 percent in April.
Public DB plans are now up 0.56 percent against their goal
year-to-date, but remain 9.74 percent behind their 12 month
target.
Endowments & foundations' goal of real returns in
excess of inflation and 5 percent spending was exceeded by 1.16
percent in April. They are now up 1.62 percent against their target
year-to-date, but 8.42 percent behind their return target over the
last 12 months.
Of the asset classes the scorecard tracks, High Yield was
among the best performing asset classes in April, returning 3.9
percent to investors. The High Yield market continues to benefit
from rising oil prices, and the relief they have provided to the
energy sector. Long Duration Fixed Income and Emerging Market
Equities continue to set the pace among asset class returns
year-to-date though—each supporting returns of 8.6 percent and 6.3
percent, respectively. REITS were one of the only asset classes to
decline in April, down 50 basis points. Still REITs are up 3.9
percent year-to-date.
Notes to Editors:
BNY Mellon Fiduciary Solutions is a division of The Bank
of New York Mellon.
BNY Mellon is a
global investments company dedicated to helping its clients manage
and service their financial assets throughout the investment
lifecycle. Whether providing financial services for institutions,
corporations or individual investors, BNY Mellon delivers informed
investment management and investment services in 35 countries and
more than 100 markets. As of March 31,
2016, BNY Mellon had $29.1
trillion in assets under custody and/or administration, and
$1.6 trillion in assets under
management. BNY Mellon can act as a single point of contact for
clients looking to create, trade, hold, manage, service, distribute
or restructure investments. BNY Mellon is the corporate brand of
The Bank of New York Mellon Corporation (NYSE: BK). Additional
information is available on
www.bnymellon.com. Follow us on Twitter
@BNYMellon or visit our newsroom at
www.bnymellon.com/newsroom for the latest
company news.
All information source BNY Mellon as of March 31, 2016. This press release is qualified
for issuance in the US only and is for information purposes only.
It does not constitute an offer or solicitation of securities or
investment services or an endorsement thereof in any jurisdiction
or in any circumstance in which such offer or solicitation is
unlawful or not authorized. This press release is issued by BNY
Mellon Investment Management to members of the financial press and
media and the information contained herein should not be construed
as investment advice. Past performance is not a guide to
future
performance.
Contact:
Scott Pepper
+1
212-635-1743
scott.pepper@bnymellon.com
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SOURCE BNY Mellon