ETFs to Rescue Public Pensions

According to a recent special report in Pensions & Investments entitledFunds looming liquidity crisis,” public pensions will be hard pressed to directly own the alternative asset allocations that are needed to generate the returns required for looming distributions to plan participants. The reason? Not enough liquidity, given the future need for distributions, in the actual alternative asset classes. According to the article: “the need to provide liquidity to pay benefits over the next few decades will mean they (pension plans) can’t increase or even maintain existing allocations to real estate, private equity, timber, hedge funds and other alternative asset classes.

So what will plans likely do? Move assets to public equities and/or fixed income says the article. What!?! The plans will essentially be saying good bye to the attractive returns and correlations of alternatives exactly when they will need them the most! Wake up public pension plans! Don’t abandon something you literally can’t afford to lose! Instead consider the vibrant and expanding marketplace of ETF alternative products that were built with liquidity in mind. ETFs deliver what pensions want (alternatives) AND what they need (liquidity). Here’s how…

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