Protect University Retirement Resources During Market Volatility

In the first quarter of 2022 alone, market volatility – from inflation, residual economic effects from COVID-19, and the invasion of Ukraine – has left many university faculty concerned about the impact on their retirement accounts.  Here are three important steps to consider taking to help protect your retirement resources during a volatile market environment. 


1) Don’t let emotions cloud your judgment

Fear of a continued downward trend might motivate you to sell your stocks. Instead, focus on allocation. With proper allocation between stocks and bonds your portfolio has the potential to weather volatility and deliver expected returns long-term. Low-volatility assets help protect you when stocks go down, while stocks offer growth potential.

Even professional money managers find it difficult to overcome emotional investing. In fact, they often hire someone else to manage their personal portfolios to remove the emotional element from the process. While risk and uncertainty define investing, you can avoid making emotional decisions by ignoring the headlines of the day. Short-term considerations should never supersede long-term investment goals.


2) Rebalance your portfolio

During the financial crisis of 2008 to 2011, when stocks were down almost 50 percent, many people found it tempting to get out of the market. Instead, they should have considered rebalancing their portfolios. Rebalancing helps keep portfolio risk at a level appropriate for your situation. If you don’t monitor your portfolio regularly, it can get out of balance.

People who started the financial crisis period with a 50 percent equity and 50 percent “fixed-income” (or, bond equivalent) portfolio may have seen that ratio fall to equities equaling only 30 percent at the low point of the stock market plunge. So, when the rally came, those people didn’t have enough equity value remaining to dig their way out of the hole. Philosophically and statistically, they should have been adding to stocks, but emotions told them to sell even more.

If you rebalance your own portfolio, please exercise caution. In the past, some people turned to bonds for safety in their investments. As interest rates rise, however, bonds tend to include more risk. 


3) Consider alternatives to bonds

Many universities offer tools other than bonds, such as stable value funds, to help diversify a portfolio. We believe this type of asset can potentially be a key cornerstone of portfolios in any market situation. Using these types of assets also ties in well with rebalancing. These types of investments are appropriate for the fixed income “bucket” and can be a useful replacement for bonds.

This is important because the market price of bonds has an inverse relationship with interest rates. If interest rates rise, bond prices decline. (The inverse is also true — when interest rates drop, bond prices increase.) With more interest rate hikes by the Fed likely in the coming year, bonds may not be the best low-volatility option for the portion of your portfolio designed for value preservation. Evaluating and learning more about these types of investments could be crucial for you as you develop and maintain your portfolio. 


Have a Question?

At Filbrandt, our team is committed to promoting financial literacy among university retirement plan participants. To learn more about Filbrandt and how we work with university professionals, we invite you to schedule a 15-minute phone call to discuss how these steps apply to your situation. 



Filbrandt, the University Division of Savant Wealth Management, is an SEC registered investment advisor serving clients in academia nationally. Past performance is no guarantee of future results. Our advisers have specific and in-depth knowledge about university employee benefit programs and retirement plans. We work with university faculty, physicians, and other professionals. We are not associated with any university, or any retirement vendor and we have no access to your private retirement or personnel information.

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