@jmski52 said:
Backdating a purchase that was never made - doesn't validate what you say about an increasing rate environment decreasing fund liabilities. Nice try, but it's a "no go".
I didn't say that. I used those as an example of how a pension fund manager can defease long-term liabilities. It's Asset Liability Management 101. When rates move up, grab bonds -- like the ones costing 23 cents on the dollar while avoiding said bonds when they are 48 cents on the dollar.
Right now, fund manages are using spread product -- corp bonds, MBS, ABS -- to get yield above Treasuries. Short-term yields near 4.75% won't help long-term.
@jmski52 said:
What assets to pension funds mostly hold, coho? What happens to existing pension fund bond holdings when rates rise after more than a decade of artificially-suppressed rates?
In your typical non-answer fashion you said, Because an increase in interest rates decreases their liabilities
So, sure - I'll reframe my question to you - Name the pension fund liability that decreases when the interest rate increases.
The present value of the liability decreases.
See, I answer questions. I ain't afraid.
You need more salt?
BTW---I don't think you know what pensions funds mostly invest in, but I'll let you answer that for yourself with a simple Google search. I'm sure you could figure out how as you seem to be good at exploring the dark crevices of cyberspace.
Comments
I didn't say that. I used those as an example of how a pension fund manager can defease long-term liabilities. It's Asset Liability Management 101. When rates move up, grab bonds -- like the ones costing 23 cents on the dollar while avoiding said bonds when they are 48 cents on the dollar.
Right now, fund manages are using spread product -- corp bonds, MBS, ABS -- to get yield above Treasuries. Short-term yields near 4.75% won't help long-term.
The present value of the liability decreases.
See, I answer questions. I ain't afraid.
You need more salt?
BTW---I don't think you know what pensions funds mostly invest in, but I'll let you answer that for yourself with a simple Google search. I'm sure you could figure out how as you seem to be good at exploring the dark crevices of cyberspace.
Knowledge is the enemy of fear