6/19/13 4:07 PM – Retirement Plan Trustees – Pay Attention!

If you are a trustee of a retirement plan, whether profit sharing or pension, it’s time to really pay attention. After a 31-year almost unbroken bull market, bond prices have begun to head down. Most bond funds are likely to be money losers in 2013 and 2014, and perhaps 2015 as well.

If you have much money allocated to bonds in a pension plan, that could be a problem in terms of both risk and return.

If your 401(k) plan, like most plans, has only a couple bond funds in your lineup, it is highly doubtful they are built to handle rising interest rates. You need to look at alternatives before your more risk-averse participants find that they are losing money without even being in stocks. If you don’t have a stable value or floating rate fund in the plan, better hop to it.

Simply put, in most plans bond market diversification has been neglected in favor of so many stock funds. Most plans I see have an average of 17 stock funds and 2 bond funds and the bond funds are even similar to each other. This is probably the time that neglect of bond market diversification will start to bite participants.

I would be happy to consult with you on this because I’ll bet that your current plan investment advisor has not yet had this conversation with you.

Dave Hoshour
704-698-1040

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