The majority of Plan assets are invested in the stock market. This is because history has shown that over the long term, stocks provide higher returns than bonds or cash. Since the majority of Pension Plan members have over 25 years until retirement, well-chosen stock market investments will likely prove to be the most stable investments for long term growth. This is the reasoning behind pension regulations requiring we invest 40% - 70% of the overall Plan in equities.
Equities make up approximately 70% of the investments. Bonds and other fixed income securities make up the remaining 30%. Equities are comprised largely of mid to large global companies, such as Apple Inc., Amazon, JP Morgan Chase & Co. and Johnson & Johnson, just to name a few; fixed income investments primarily include government and investment grade corporate bonds like US Treasuries, Morgan Stanley and Goldman Sachs Inc.
The Plan invests all or substantially all assets overseas to ensure diversity and liquidity. Plan members live and work in the Cayman Islands and many own homes and businesses here. It is in their best interest to invest their pension money elsewhere, to compensate if the economy of the Cayman Islands should experience a prolonged period of weakness. The pension plan also needs to be able to buy and sell its holdings quickly and easily to react to changing market conditions or cash flow needs. This means the Plan needs to invest in larger companies with active daily trading.