Fortune 500 pension plans shift $1B to bonds

Many pension managers are allotting more assets to long-term investment-grade corporate bonds, reported Standish Mellon Asset Management Co. LLC of Boston today. The firm, which is the fixed-income specialist for BNY Mellon Asset Management and a subsidiary of The Bank of New York Mellon Corp., said that 15 Fortune 500-company pension plans have added about $1 billion to their bond portfolios since January. Nearly half of the $1 billion is new money and the rest is re-allocated, said BNY Mellon spokesman Mike Dunn. “We are in a rough patch for pension plans,” Kent J. Wosepka, chief investment officer of active fixed income for Standish, said in a statement. “However, this period has some major differences from previous episodes of market volatility,” he added. “For example, during the 2001 recession, equity prices fell, decreasing the value of pension plan assets while liabilities rose.” In this recession, the present value of plan liabilities has declined, he continued. “One way to cushion the impact of falling yields would be to invest plan assets in long-term investment-grade corporate bonds,” said Andrew Catalan, senior portfolio manager at Standish. Standish Mellon had $60 billion in assets under management as of April 1.