Last week, President Trump unveiled an extensive tariff plan, prompting concerns amongst investors of a global trade war, higher inflation, and a potential recession. Over the last few days, global stock markets have sold off severely, with the S&P 500 Index (a bellwether indicator of the U.S. stock market) plunging nearly 11%, the largest decline since the COVID-19 Pandemic. Given the many uncertainties around global tariff policies, heightened stock market volatility may continue to persist for the foreseeable future.
During these unprecedented times, you may be concerned about the security of your pension benefits, which are paid directly from LAFPP’s investment portfolio. Rest assured that the LAFPP Board has prudently designed an asset allocation strategy that diversifies the portfolio across stocks, bonds, private equity, real estate, and other investment types that historically do not move perfectly in sync with stocks. While the portfolio is not completely immune to valuation declines, this diversified investment approach allows the Plan to meet its long-term investment goals while mitigating the impact of short-term stock market volatility.
Since the Plan was established in 1899, the investment portfolio has withstood several significant market crashes including the Great Depression, Black Monday, Dotcom Bubble, Great Financial Crisis, and most recently the COVID-19 Pandemic. Despite these adverse events, the Plan currently has a strong combined market value funded status of 99.2% (as of June 30, 2024), as a result of the Board’s diversified investment approach, strong contribution policy by the City of Los Angeles, skilled investment managers, and meticulous investment oversight process by the Board, staff, and consultants. We will continue to remain steadfast to our time-tested investment approach in the current turbulent market environment.
Most importantly, we will continue to provide you with your hard-earned retirement benefits.
