The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Exotic investment strategy

In December, GM outlined a revised strategy designed to deliver at least a 9% return at its pension plans, including increased allocation to such asset classes as emerging-market debt, high-yield bonds and real estate while reducing global equity allocation to less than 50%. Some commentators feel that investing in more exotic asset classes and using hedge fund managers with the aim of reducing volatility is slightly odd. But GM treasurer Walter Borst insists that investing in additional asset classes will add to diversification and so reduce volatility on a portfolio basis. "We can do this because we have such large assets under management and expertise in house," he says. "Some people have said that by investing in some of these asset classes we must be adding risk. Well, some of the items might be more or less risky, but we like to think we're a little more sophisticated than that."

There's always the hope that the pension plan will keep performing above expectations as it did in the second half of 2003. GM has also just reduced the discount rate it uses to calculate the present value of its pension obligations by 75 points to 6%, compared with Ford's 6.25%.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree