NEPC’s Brad Smith was quoted in a recent Pensions & Investments article to discuss concerns of plan sponsors found through our 2022 DB Flash Poll. View the article on Pensions & Investments’ site here.
A survey by NEPC asking 44 corporate and health-care pension funds what they thought were the top three risks to the stock market over the next 12 months said that 93% chose the Federal Reserve’s ability to fight inflation as one of the risks, 79% picked rising interest rates and 57% chose declining corporate profit margins.
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“We believe the first three responses are connected as plan sponsors remain concerned about the overall health of the economy,” said Brad Smith, partner and member of NEPC’s corporate defined benefit team. “We believe many respondents are concerned that the Fed may overtighten, sending the economy into a hard recession.”
Mr. Smith said that falling profit margins would add additional downward pressure on equity valuations and would likely lead to additional pressure on stock prices.
“Therefore, it is not surprising that plan sponsors identified profit margins, the Fed and higher rates as the biggest concerns,” he said.
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