Institutional investors: stock market boon or bane?
invite response
2011 Aug 22, 4:50am 1,306 views 1 comment
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corntrollio
2011 Aug 23, 8:53am
Having a target like that encourages riskier and more illiquid investments. That works for universities, although they have to be prepared for an occasional lean budget, but works less for a pension fund where a larger number of people, relative to before, are coming closer to retirement.
I keep thinking about this... How much are yield-chasing institutional investors pushing up stock prices right now? For instance Calpers is obliged to chase a 7.75% return target.
Calpers eyes maintaining 7.75 percent return target
http://www.reuters.com/article/2011/03/16/us-financial-calpers-target-rate-idUSTRE72F3MS20110316
If so, this can't go on forever, at some point in the near future many of these institutional investors are going to have to cash out to pay Baby Boomer pensions. Bloomberg had a bit on this today:
Boomers May Stall Stocks for Decades: Fed Paper
http://www.bloomberg.com/news/2011-08-22/baby-boomers-selling-shares-may-depress-stocks-for-decades-fed-paper-says.html
#investing