Sterling Heights (Mich.) Retirement System approved a new asset allocation that could result in manager searches, said Larry Amez, president of the board of trustees. The $145 million fund added small-cap equity as an asset class and increased real estate and international equity targets. The new mix: 40% U.S. large-cap equity, 10% U.S. small-cap equity, 10% international equity, 35% bonds and 5% real estate. The fund had a mix of roughly 60% stocks, including 4% international, and 40% bonds. The fund has a small amount in the MIG real estate fund, but is in the process of exiting the fund. Merrill Lynch assisted with the study.
A decision on whether to do manager searches or to use existing managers is expected at the board's May 27 meeting.
The volume of reported defined benefit hirings increased last year to 1,306 money manager placements, representing $82.992 billion, compared with 1,220 placements representing $52.454 billion of assignments in 1995, according to the Tracker service of Eager & Associates. Active equities accounted for 39% of all placements and 24% by dollars invested. Within that category, small-cap equity assignments continued to be the most popular U.S. active equity style. Small-cap accounted for 38% of active equities hires by number and 29% by dollars invested.
The number of defined contribution placements declined last year largely because of changes in the way the hirings are reported, but the dollar investments awarded in searches nearly doubled to more than $26.9 billion.
Travelers Group will grant stock options to all employees outside of its 401(k) plan if the company doesn't receive government approval to contribute options to the plan. A Travelers spokesman said the company will proceed with a plan to issue stock options to all employees equal to 10% of compensation with a $40,000 compensation cap.
The IRS is reconsidering its earlier ruling that would have cleared the way for Travelers to become the first company to contribute stock options to its 401(k). The Labor Department also delayed approving Travelers' application for a prohibited transaction exemption.