Pension Pulse: The Model That’s Killing Pension Funds?
At the heart of the pension meltdown is the investment model. The investment managers who led the Caisse into its 2008 meltdown were simply following the dominant investment theories of our time: Equity markets theoretically will provide solid average returns over the long term. Judicious stock picking can help a fund get better-than-average returns. More recently, all fund managers also came to believe that still higher returns could be found in other fields, including asset-backed securities and private investment markets.