Shervin Pishevar says that pension funds could eventually be sunk by bad Federal Reserve policies

Shervin Pishevar ranks as one of the most respected entrepreneurs and venture capitalists in the world of technology today. After having founded dozens of successful technology-based startup businesses, Shervin Pishevar went on to form his own venture capital firm, Sherpa Capital. Since its founding, Sherpa Capital has been behind the formation of some of the most impressive companies in the tech sector today, including Uber, Airbnb and Virgin Hyperloop. As a solo entrepreneur, Shervin Pishevar has also founded a number of successful tech companies on his own, including Ionside, WebOS and Social Gaming Network.

When he’s not busy running his technological empire, Shervin Pishevar somehow still finds time to address his many Twitter followers with his insightful takes on current events, especially regarding economics, innovation and the global technology industry. In a recent tweet storm that lasted nearly 20 hours, Pishevar addressed some of the most pressing concerns that are currently facing the country as a whole. Among those, Pishevar expounded on the serious impact that current Federal Reserve policy is likely to have on the future solvency and, indeed, long-term viability of the nation’s private and public pension funds.

Pishevar says that one of the most serious problems that the nation’s pension funds are currently confronted with is the fact that they have had to chase returns from traditionally safe, debt-based assets into much riskier equity assets. Traditionally, pension funds have been able to gain a very reasonable rate of return simply by having a portfolio that is heavily weighted towards other debt instruments. However, with the advent of quantitative easing, the interest rates have been suppressed so heavily that pension funds across the country have been forced to seek higher returns by taking on more risk. This has led them to a catch-22 situation where they are guaranteed not to achieve their actuarial goals by staying in debt instruments but where they may also face potential disaster by taking on too much risk.

Now, any hiking of interest rates could potentially devastate pension funds’ current bondholders while also crashing the stock market on which they currently rely.

https://techonomy.com/people/shervin-pishevar/