Remember 130/30 Strategies?

I saw this headline from P&I:

“84% of Investors Apply or are Considering, ESG” – Morgan Stanley survey claims

To say that I’m skeptical would be a major understatement.

I couldn’t help but think about the “excitement” surrounding 130/30 products back in the 2005-2007 era when Merrill Lynch and others were predicting $1 trillion in these products within a relatively short timeframe. We know what happened once the Great Financial Crisis hit.  Is there a 130/30 strategy still being utilized?

As we’ve said many, many times, managing a pension plan is not about the return (the ROA is not the Holy Grail), but about meeting the promised benefit at the lowest cost.  How does ESG help a plan sponsor achieve that goal? There are a lot of claims as to the success of these programs, but I hear similar praise being hyped on OCIO offerings, too, with very little proof that there is consistent value added.

During my 37 years in this industry, I’ve witnessed many cycles, which always seem to come with the next “greatest” product offering.  Wouldn’t it be refreshing if we just got back to basics within the retirement industry by securing the promise without playing games with the employee, employer, and taxpayer money?


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