In addition, McKinsey predicts looming regulatory and accounting changes will force plan sponsors to quickly adopt sharply different approaches to portfolio construction, leaving long-dominant money managers competing with insurers and investment banks to meet their needs.
At least $1 trillion of the $2.3 trillion now in private-sector pension plans will be invested in “entirely different products and solutions by 2012,” according to the study. Allocations to active domestic long-only equities are expected to plummet by 67 percent, with long-duration fixed income, hedge funds and private equity picking up the bulk of those losses.
Filed by Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail email@example.com.