Kmart finished upgrading its $1.4 billion Retirement Savings Plan Feb. 1, adding new investment options and changing managers, outsourcing record keeping and adding a profit-sharing feature, said Don Morford, director of benefits.
Kmart added five investment options, bringing the total to nine. The new funds are the EuroPacific Growth Fund, managed by Capital Research & Management; an S&P 500 indexed equity fund managed by Vanguard; and a series of three lifestyle portfolios. The lifestyle portfolios invest in varying proportions in the other options.
Also, the Constellation Fund managed by AIM Advisors replaced a growth equity fund managed by Twentieth Century.
Kmart added a variable profit-sharing feature as well.
Record keeping had been internal, but now will be outsourced to SunGard.
The median portfolios for all equity investment styles underperformed the S&P 500 for the quarter ended Dec. 31, and almost all underperformed the index for the year, the PIPER Managed Accounts report shows.
The S&P 500 returned 6% for the quarter, vs. 4.1% for the overall equity median; for the year, the S&P returned 37.6%, while the overall equity median was 33.3%. Core large-cap equity portfolios underperformed the index for the quarter (with 5.4%), but outperformed for the year (37.7%). The median small-cap growth portfolio returned only 1.8% for the quarter, but 36.8% for the year.
In fixed income, only broad market and long duration bonds beat the Salomon Broad Bond Index for the quarter and the year. While the index returned 4.3% for the quarter and 18.6% for the year, the median broad market account returned 4.5% and 18.9%, respectively, and the median long duration bond account return 7.2% and 27.1%, respectively.
Median international equity and global equity accounts also underperformed the MSCI EAFE and World indexes for both the quarter and year.
The median international equity return was 3% for the quarter and 11.4% for the year, compared to the EAFE's 4.1% for the quarter and 11.6% for the year. The median global equity portfolio returned 3.4% for the quarter and 17.4% for the year; the World Index returned 4.9% for the quarter and 21.4% for the year.
Michael Coombe has become investment adviser-pensions for the 4 billion ($6 billion) British Broadcasting Corp. pension fund, London, on a part-time basis.
Mr. Coombe retired as pensions director-finance & legal from the Grand Metropolitan PLC pension fund last year. At the BBC, he will take over from Martin Notley, secretary and chief accountant-pensions, when Mr. Notley retires around the middle of the year.
Mr. Notley's job is being reduced in scope as the BBC has been outsourcing its accounting functions to The WM Co.
About 42% of defined benefit pension plans reached government full funding limitations in 1994, according to a new study by Buck Consultants, down from 45% in 1993.
The Buck study of more than 200 companies also found interest rates used to determine contributions declined slightly to an average of 8.08% in 1994 from 8.2% in 1993.
The estimated rate of return on investments increased to 10.4% in 1994 from 9.2% in 1993, according to Buck.
Preliminary results from another Buck survey of large employers found the average FAS 87 discount rate dropped to 7.35% at the end of 1995 from 8.32% in 1994.
Tim Ferguson, formerly chief executive officer of HSBC Asset Management, will spearhead Putnam Investments' push into international equity products.
Mr. Ferguson will become senior managing director, head of international equity - a new position - at Putnam.
He will oversee Putnam's international equity management and business development, new product development, marketing and administration.
At HSBC, Paul Guidone has assumed the chief executive officer responsibilities in addition to his roles as managing director institutional and global chief investment officer.
The $111 million Illinois Wesleyan University endowment fund hired four managers for a total of $62 million, said Kenneth Browning, vice president for business and finance.
Putnam Investments and T. Rowe Price each got $20 million to manage in large- and midcap equities. Warburg Pincus was hired to manage $12 million in small cap equities, and Capital Guardian was hired to manage $10 million in an international equity commingled trust, he said.
The Common Fund had been managing the assets, and will continue to run $29 million for the fund.
The approximately $50 million Braintree (Mass.) Contributory Retirement System has diversified its portfolio, hiring its first international equity manager, a domestic index manager and a real estate manager.
Phyllis DiPalma, executive director, said Boston Co. will run $5 million in international stocks; State Street Global Advisors, $15 million in a Russell 3000 fund; and Metric Institutional Realty, $1 million in real estate.
The board also is expected to hire another core real estate manager for about $1 million.
The system previously had all its assets in a balanced fund with 1838 Investment Advisors; 1838 continues to manage the remainder.
The changes are the result of an asset allocation study conducted by The Hannah Group.
Bringing an end to a lengthy legal battle between Evangelical Lutheran pension officials and a group of dissident plan participants, the Minnesota Supreme Court upheld an appellate court decision that said the pension fund's South Africa investment policy was not under civil court jurisdiction.
A group of pastors and lay personnel had sued the Board of Pensions of the Evangelical Lutheran Church in America over South Africa divestiture. The appeals court had said the investment policy was motivated by the church's active opposition to apartheid, and therefore wasn't a civil court matter.
The $20 million 401(k) plan of Walbro Corp. hired EFR Advisors to provide employee education. EFR will hold employee seminars and in-depth investment education twice this year at each of Walbro's eight U.S. locations. The meetings will increase to quarterly in 1997.
EFR also is developing a series of asset allocation funds that will invest in the five funds the plan offers from American Express Institutional Services, said William Spievak, an internal plan consultant.
EFR also will evaluate the investment options and may suggest additional ones, he said.
