FROM: Lisa Sorani, Manager of HR Employee Services LS -

More documents

Recommendations

Info

POSSIBLE OUTCOMES: ALTERNATIVE SCENARIO 1 r • Thus far the Fed’s unprecedented d monetary policy has not sparked a large increase in the rate of inflation • Inflation has remained relatively muted with core inflation (ex volatile energy and food) remaining below 2% • Despite this, many economists are still worried that the seeds of future inflation are being sown today through the Fed’s easy money policy o o o They worry continuous printing of money will eventually lead to a marked decline in the dollar This would greatly increase the cost of imports but would also flow through to domestic goods due to the fact that a large percent of domestic goods use imports purchased internationally If inflation does start it would put the Fed in a particularly challenging position ♦ ♦ They could continue their accommodative process risking runaway inflation Or they could raise interest rates to slow inflation risking choking off the nescient recovery Pension Consulting Alliance, Inc. ││ EBMUD Fixed Income Discussion │ 22
POSSIBLE OUTCOMES: ALTERNATIVE SCENARIO 1 r • Regardless of whether or not the prolonged period of low interest t rates and money printing actually creates higher rates of inflation, this alternative scenario would be extremely challenging for investors/Plan Sponsors • A prolonged period of near zero interest rates will make it exceedingly difficult for Plan Sponsors to meet their required investment return • Further complicating the situation is the knowledge that the continual money printing can lead to inflation o Many Plan Sponsors would likely look to alter their asset allocation to hedge this risk • Under this scenario, an investment in Fixed Income would have a highly asymmetric risk return profile o o Investors would have to accept near zero rates of return While simultaneously, being exposed to the possibility that high inflation could severely damage their portfolio Pension Consulting Alliance, Inc. ││ EBMUD Fixed Income Discussion │ 23
Page 21 and 22: M E M O R A N D U M Date: April 29,
Page 23 and 24: Recent Investment Performance Barro
Page 25: Additional Considerations Barrow Ha
Page 29 and 30: For example, as of the most recent
Page 31 and 32: Q1 - 2013 Preliminary Recent Invest
Page 33 and 34: Q1 - 2013 Preliminary Periods endin
Page 35: Q1 - 2013 Preliminary Fixed Income
Page 38 and 39: AGENDA ITEMS Section Tab Current In
Page 40 and 41: THE CURRENT INTEREST RATE ENVIRONME
Page 50 and 51: SECTION 2 LOOKING FORWARD Source: W
Page 52 and 53: LOOKING FORWARD: INTRODUCTION r •
Page 54 and 55: LOOKING FORWARD: POSSIBLE OUTCOMES
Page 56 and 57: POSSIBLE OUTCOMES: ALTERNATIVE SCEN
Page 78 and 79: LOOKING FORWARD: CONCLUSIONS r •
Page 80 and 81: INVESTMENT OPTIONS r • In light o
Page 82 and 83: INVESTMENT OPTION 2 r • Option 2:
Page 84 and 85: INVESTMENT OPTION 4 r • Option 4:
Page 86 and 87: INVESTMENT OPTION 4-A r • Option
Page 88 and 89: INVESTMENT OPTION 4-B r • Option
Page 90 and 91: INVESTMENT OPTION 4-C r • Option
Page 92 and 93: CONCLUSIONS r • There are a few a
Page 95 and 96: Considering a Real Return Class Eas
Page 97 and 98: Defining Inflation • Inflation is
Page 99 and 100: Expert Views 5
Page 101 and 102: Expert Views: Inflation Doves • B
Page 103 and 104: Expert Views: Inflation Doves The E
Page 105 and 106: Expert Views: Inflation Hawks • B
Page 107 and 108: Expert Views: Inflation Hawks The E
Page 109 and 110:
Expert Views: Summary • Experts a
Page 111 and 112:
Institutional Investor Response •
Page 113 and 114:
Modeling the Real Return Class •
Page 115 and 116:
Modeling the Real Return Class •
Page 117 and 118:
Implementing a Real Return Class
Page 119 and 120:
Appendix 25 25
Page 121 and 122:
Modeling a Real Return Class SUMMAR
Page 123 and 124:
A Brief Description of Global Infla
Page 125 and 126:
A Brief Description of Absolute Ret
Page 127 and 128:
A Brief Description of Absolute Ret
Page 129 and 130:
A Brief Description of Commodities
Page 131 and 132:
A Brief Description of Oil & Gas RE
Page 133 and 134:
A Brief Description of Oil & Gas RE
show all

FROM: Lisa Sorani, Manager of HR Employee Services LS -

Create successful ePaper yourself

Delete template?

Save as template?