The staff of the $59 billion California State Teachers' Retirement System, Sacramento, is proposing a currency hedging program using currency forwards because non-dollar currency is expected to play an increasingly significant role in the fund's investment returns.
The fund is expected to increase the non-dollar assets in its portfolio to 25% of assets in the coming years; the fund's total investment portfolio is expected to increase to $100 billion by the year 2010.
The CalSTRS board might approve a currency hedging policy next Wednesday. The fund's staff is recommending that currency hedging transactions be done internally. The board also will consider that day whether it should authorize the pension fund's staff to co-invest with the general partners in alternative investments. Currently, it invests in limited partnerships. No amount to be co-invested was mentioned.
The $2 billion Sacramento (Calif.) County Employees' Retirement System has made some fine-tuning as part of its recently completed bi-annual review of its $440 million of fixed-income investments, said CIO Christopher Ailman.
The fund reduced by $50 million what was a $95 million short-term portfolio managed by Payden & Rygel. As a result, Lincoln Capital, which manages a $215 million indexed bond portfolio, will receive $35 million, and Bradford & Marzec, which runs a $140 million core active fixed-income portfolio, will get another $15 million.
The moves are aimed at rebalancing the aggregate fixed-income portfolio's duration and credit risk so the portfolio better approximates the Salomon Broad Investment Grade Index, said Mr. Ailman.
Not one 401(k) plan vendor was rated excellent by large, medium, small or very small plan sponsors in a recent customer satisfaction survey by DALBAR Inc. Some received the highest ranking in individual service categories, but few service providers were graded even very good by their clients in overall service.
CIGNA was ranked highest by plan sponsors with more than 5,000 employees. American Express, Hewitt, Fidelity Institutional Retirement Services and T. Rowe Price followed. Midsized plan sponsors - with 1,000 to 4,999 employees - rated T. Rowe Price first, followed by Vanguard, Hewitt, Principal Financial and Wells Fargo Nikko. For plans with 100 to 999 employees, Fidelity Institutional Retirement Services was ranked No. 1, followed by Vanguard, T. Rowe Price, Principal Financial and Diversified. Sponsors with fewer than 100 employees put Principal Financial Group at the top of the rankings. Prudential, First Union National Bank, Northwestern Mutual and Standard Insurance Co. followed.
DALBAR surveyed 3,500 401(k) plan sponsors in December 1994.
John Hancock Mutual has acquired the remaining 39% of JHM Capital Management, making the fixed-income manager a wholly owned subsidiary. John Hancock acquired JHM from JHM Capital Corp., the firm's previous holding company; terms weren't disclosed.
The firm will operate under its current management.