SPRINGFIELD, Mass. - Massachusetts Mutual Life Insurance Co. formed MassMutual Institutional Fund, a new mutual fund series designed primarily for 401(k) plans, with a new pricing structure.
The series passes operating expense savings on to clients as their retirement plan assets continue to grow.
Massachusetts Mutual Life will be the investment adviser. Affiliate Oppenheimer Management Corp., New York, will act as subadviser for the funds' international equity portfolio through a subsidiary, HarbourView Asset Management Corp.
In addition, a MassMutual investment subsidiary, Concert Capital Management Inc., Boston, will act as subadviser for the management of other equity portfolios in the MassMutual fund series.
The MassMutual Institutional Fund offers three classes of shares based on the volume of invested assets and plan participants. All fund classes are sold without front- or back-end sales loads. Other charges and administrative fees are varied to reflect the assets and participant volume in each class.
Operating expenses for larger plans reflect reduced or waived distribution service fees and other charges.
Every six months, clients' retirement plans will be reviewed to determine if they fit a new, lower cost classification. If so, plans will be moved automatically to the lower cost class. "The institutional pricing is a revolutionary concept for mutual funds," said Edmond F. Ryan, vice president at MassMutual.
"Development of this fund series is in response to a growing concern among institutional investors: curbing operating expenses."
MassMutual manages $7 billion in defined contribution retirement plan assets.
Janie Kass, director of investment consulting services at Kwasha Lipton in New York, said of MassMutual's program: "It could very well be innovative in that it gives a fee structure like a separate account with the diversification (and other convenient features) of a mutual fund."
But she added: "It sounds like I wouldn't want to be on the administrative side."
Oppenheimer Funds Distributor Inc. will act as distributor for the series' seven investment accounts, including money market funds, international, bond and stock funds.
Existing clients may transfer their invested assets into the new MassMutual Institutional Fund or maintain their tax-exempt assets in separate investment account portfolios.