Institutional Insights

Investment Strategy Quarterly:

The Big Picture – First Quarter 2015

Often, it may seem that only negative events surprise the markets. Every so often, however, a positive market event is the driver, such as the recent drop in oil prices, which have fallen quite significantly since the summer of 2014. With prices continuing to test new lows, we believe many investors are likely beginning to question the broader-reaching implications.


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Focus On

How well is your Defined Benefit Pension Plan managed?

Are you able to:

  • Minimize the variability of cash contributions to your Plan?
  • Minimize the variability of long-term debt section of your balance sheet where pension balance sheet liability (i.e. funded status) is reported?
  • Receive quarterly pension status updates, which include the Plan’s funded status, to help with financial planning?
  • Increase board and/or investor confidence with more predictable and less volatile impact of the Pension Plan on the cash flow and balance sheet statements?

If you answered "no" to any of the above questions, PNC Institutional Asset ManagementSM may be able to help!


Research and Publications

PNC's team of investment strategists examine and provide key insights on financial market challenges and opportunities that affect institutional investors.
Quarterly Investment Strategy
    Deleveraging Aiding a Longer Recovery
    The U.S. economy has made significant strides since the financial crisis and subsequent Great Recession. Looking back, we now know that at the heart of the financial crisis was a massive buildup of credit that ultimately resulted in a bubble. Since then, we note the significant deleveraging that has taken place. In this paper we explore the impact this deleveraging has had on the economy.

    Pensions: Funding Requirements May Increase in 2014
    In the aggregate, pensions ended 2013 on their strongest footing in more than five years. Last year, rising interest rates and stellar stock price performance helped the pension assets of S&P 500® companies increase by $303 billion—possibly one of the largest single-year increases ever. As a result, the average funding ratio'the percentage of liabilities covered by assets'of S&P 500 companies by year-end 2013 jumped 21 percentage points to 95%, its highest level since 2008.

    Using Data to Understand Performance
    Second Quarter 2014

    An important step in investment management is analyzing portfolio performance. Interpreting the underlying data and stock performance is imperative, but it can be a complex process. Many investors do not have the time or resources to spend studying all stocks they own or may consider owning, whether individually or through a managed product or exchange-traded fund. An advisor can lend experience and understanding in this area, as can an active manager.

    Smart Beta
    First Quarter 2014

    Since the tumultuous market environment that accompanied the financial crisis, investors have had increased interest in looking for alternative portfolio construction methodologies in order to better weather market volatility and losses. One seemingly complex-yet once explained, understandable-recently mainstream institutional investment option is the concept of smart beta investing.

    Pension Funds: Facing Higher Interest Rates
    Fourth Quarter 2013

    Over the past 30 years, pension funds have endured a long period of falling interest rates. What impact will rising rates have on these plans?

    Defined Benefit Pensions: Addressing Underfunding
    Third Quarter 2013

    The financial crisis and subsequent persistent low-interest-rate environment has magnified key issues regarding defined-benefit pensions. Although these issues are reasonably easy to identify, solutions are often challenging, and may be painful to implement.

Monthly Investment Outlook
    February 2015 - Addressing the Wall of Worry
    Markets have had to digest a host of economic and market data, as well as geopolitical concerns, over the past few months. Despite the continued economic recovery in the United States and the good relative equity market performance, there is an air of uncertainty surrounding the broader global landscape.

    January 2015 - Themes for a Divergent Year: 2015 Outlook Part II
    This month’s Investment Outlook title reflects our view that 2015 will bring a year of continued economic expansion in the United States. This will be a diverging trend from some other developed countries, whose economies are forecast to experience slowing growth while U.S. growth speeds from the 2014 rate.

    December 2014 - Divergent Paths: 2015 Outlook Part I
    We believe 2015 will be a year of continued economic expansion for the United States. Global trends indicate a divergence of growth, with the U.S. economy forecast to expand at a faster pace than this year, while some other developed countries’ economies are forecast to experience slowing growth.

    November 2014 - Bonds: Stirred, Not Shaken
    The bond markets have certainly had an interesting ride over the past year and a half. A three-decade run in bonds seemed to falter in the summer of 2013 with the beginnings of the Federal Reserve (Fed) taper talks, which eventually eased.

    September 2014 - Old Man Economy: Timing the Shifts of an Economic Expansion
    In the September Investment Outlook, Old Man Economy: Timing the Shifts of an Economic Expansion, PNC Chief Investment Strategist Bill Stone discusses the current economic recovery in the context of history and analyzes how far along it is in the recovery cycle. He also takes a look at the financial markets relative to the business cycle.

    August 2014 - Nation's Inflation Conversation
    The debate on whether consumer prices are rising and whether monetary prices will result in higher inflation is an important one from both economic and market

    July 2014 - Eurozone: Then and Now
    The Eurozone front has certainly been a bit quieter in the past 9-12 months. But the region is neither out of sight nor out of mind in our view; we continue to closely monitor this important economy.

    June 2014 - REITs: Don't Call It a Comeback
    We believe the dynamics of what's happening with REITs in 2014 reaches beyond the perspective of a direct investment, and we find it useful from a market and economic viewpoint to understand what fundamental drivers of REIT returns are at play.

    May 2014 - Mind Over Money
    This month's issue offers an analysis focusing on humans' natural tendency to look for patterns or causal relationships, even when there are none, and how knowledge of probabilities can help investors make better investment decisions.

    April 2014 - Spring Break
    As we get set to put away our winter coats, we take a moment to discuss the impact the cold winter has had on the economy and if there could be lingering consequences for the markets. In this vein we look at the economic data as well as what corporations are saying in terms of winter's impact.

    March 2014 - Troubles Emerge
    The global market environment at the start of 2014 has given investors pause. After a strong 2013, risks appear to be affecting market sentiment.

Weekly Market Guide
  • Update of market and economic data releases.
  • Week in review commentary from our Investment Strategy Team.