Are higher investment returns than the G Plan expects even possible?
It is possible to earn higher returns during market upswings, but this might require taking additional risks that we do not view as prudent. The plan fiduciaries identify and accept a level of risk necessary to obtain expected investment returns over a long-term time horizon. We believe “market returns” based upon a simple portfolio of 60% equities (S&P 500 Stocks), and 40% fixed income securities (Bonds), will generate returns that, when coupled with appropriate contribution rates, will deliver favorable results to participants. Trying to get the “highest returns” or to “beat the market” costs money in the form of additional trading and fund management fees and possible additional risks, which almost always, over the long run, ends up hurting participants’ retirement income security. We believe a simple, disciplined approach is the most prudent strategy to build retirement income for participants.
