portfolio design

Positioning for reflation

feb 15, 2017

Even as reflation takes root, low expected returns across asset classes make allocation decisions more difficult and consequential. In this first edition of a new quarterly web publication, we introduce a hypothetical asset allocation for corporate and public defined benefit pension plans.


Highlights include:

  • We have increased our five-year capital market assumptions for fixed income returns. Yet we believe investors are still better compensated for moving up the risk spectrum.
  • We adjust our hypothetical corporate and public portfolios in light of these views.
  • We break down the exposures of our portfolios into factors, in an effort to gain greater insights into underlying return drivers.

Alain Kerneis and Gabriella Barschdorff of BlackRock Client Solutions on the market outlook and asset allocation decisions.

A note from Edwin Conway

We’re pleased to introduce a new resource for U.S. defined-benefit pension funds.

Every quarter, we plan to present two hypothetical model portfolios—one for corporate plans and one for public plans—updated to reflect the latest revisions to our five-year capital market assumptions.

We’ll also provide timely commentary on our return outlook and its impact on asset allocation decisions. In future issues, look for us to delve more deeply into active vs. passive tradeoffs, the segmenting of alternatives allocations and other important inputs into portfolio design.

This new resource is a collaborative effort between the BlackRock Client Solutions team and the BlackRock Investment Institute. 

By pairing our market outlook with allocation ideas tailored to the objectives of corporate and public DB plans, we aim to provide a clearer view of the road ahead and how pension investors can travel it more effectively.

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Global Head of BlackRock’s Institutional Client Business