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Market & Investing Dynamics

Five key investment themes

We believe there are 5 investment themes currently being allocated to within defined benefit pension plans, each of which contain unique investment challenges.

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Capital Preservation and De-Risking

Limit market exposure through allocations to liability aware strategies.

    Investment Challenges:


  • Transitioning to liability-driven investing

Growth and Re-risking

Generate high-levels of returns with equal parts risk. Growth can be both liquid and illiquid.

    Investment Challenges:


  • Generating risk-adjusted alpha
  • Generating alpha with small cap equities
  • Diversifying with international equities
  • Capture the full potential of emerging markets

Income Generation

Alternative income strategies to meet the demand of projected pension obligations.

    Challenges:


  • Meeting portfolio income targets
  • Generating income through direct real estate

Interest Rates and Inflation Protection

Protecting assets against sudden or trending market shifts.

    Investment Challenges:


  • Utilizing commodities to hedge long-term inflation
  • Reducing portfolio duration
  • Protecting with listed real estate

Return Enhancement and Risk Management

Increasing risk-adjusted returns and lowering realized volatility. Can be either a core or opportunistic allocation.

    Investment Challenges:


  • Increasing fixed income return potential
  • Reducing equity volatility
  • How uncorrelated assets reduce volatility
  • How to harness genuine diversification

Let us help solve your pension plan challenges

Invesco’s Turning Points Guide features our latest thinking on defined benefit trends, with actionable steps to help optimize plan outcomes.

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