Pensions Hold Fixed Income for Crash Liquidity, Not for Yield Returns
Ash Williams · Ash Williams – Florida SBA's Reigning Chief (Capital Allocator, EP.104) · Jul 8, 2019 · at 55:18
Ash Williams, CIO of the $200B Florida State Board of Administration, explains why institutional pensions must hold bonds even when expected bond returns are negative.
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“It's not to get the marginal negative three percent. It's there because if the bottom falls out of the equity market, There will be a flight to safety, which will be fixed income. That will be the liquid asset that will be appreciated at the time, and you can rebalance into equities while they're down and make benefit payments out of liquid assets that are appreciated.”
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