Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
June 01, 1998 01:00 AM

PENSION FUND SWAPS

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    In your Feb. 23 edition, Joel Chernoff wrote in a page 1 story that an equity swap arrangement between the Ontario Teachers' Pension Plan Board of Toronto and Stichting Pensioenfonds ABP of the Netherlands is "believed to be the first ever direct equity swap between two pension funds."

    In fact, we know of at least one previously announced equity swap, this one between pension fund managers in Quebec and France. In September 1996, the Caisse de dep"t et placement du Qu‚bec publicly announced a $50 million equity swap agreement with the Paris-based Caisse des dep"t et consignations de France.

    Under the terms of the agreement, each partner invested $25 million in small-cap equities traded respectively in Canada and in France and other European countries. The payout schedule called for disbursements to the opposite member at the end of 1997, 1998 and 1999.

    Kevin Dougherty

    Senior adviser, public affairs

    Caisse de dep"t et placement du Quebec

    Montreal

    TIAA-CREF on indexing

    I read your Feb. 23, page 1 article about indexed assets with interest. Your efforts to tabulate the assets managed in this fashion are a great service to the investment community. I notice, however, we were omitted from the enhanced index listing. Undoubtedly we failed to let you know that most of what is indexed at CREF is enhanced indexed. As of the end of last year, in CREF's main account, the Stock Account, our enhanced index position on the domestic side came to $66 billion, plus $4 billion on the international side. The combination of these two would have handily placed us, I am delighted to point out, in the No. 1 spot.

    We appreciate Pensions & Investments' continued excellent news coverage and commentaries, and look forward to being an even more helpful information source in the future.

    Martin L. Leibowitz

    Vice Chairman and Chief Investment Officer

    Teachers Insurance and Annuity Association

    College Retirement Equities Fund

    New York

    401(k) employer stock

    Regarding the corporate 401(k) plans special report story "Employer stock plays a big role in investment" (Pensions & Investments, March 9, page 19), consider the question: Would a fund sponsor or adviser recommend an allocation resulting in 28%, 33%, 45% or even 88% of its assets in a single stock for the defined benefit plan as some defined contribution plans are reported to be invested? Of course not.

    In fact, sponsors have taken an increasingly activist role in matters related to participant investing. Witness the employee education programs that have been developed to teach about diversification, risk and return, volatility and other market precepts. These programs have largely succeeded in thinning the balances once amassed in stable value funds and now spread more evenly into equities. In this context, one suspects that, secretly at least, not many plan sponsors can be comfortable with participant overweighting in company stock.

    So why is there no outcry over so obvious a skewed allocation? Our discussions with sponsors point to a reluctance to appear disloyal to the company by suggesting that employees limited their holdings. Afterall, in almost all cases the CEO's compensation is heavily tied to the performance of the stock. Furthermore, the concept of aligning interests with shareholders down to the shop floor level has inherent appeal. Employees will be motivated to work harder, the argument goes, if they have a financial stake in the company.

    How then to explain to employees, the markets irrationality? Reporting on third quarter 1997 financial results for Ford Motor Co, the Wall Street Journal headline of Oct. 16, 1997, read: "Ford's profit soared 64% in third period to record levels, beating expectations." Sorry employees, reading further finds that Ford stock dropped in heavy trading. Huh? Unfortunately, the financial resources of the CEO and the average employee to weather a downturn in the company's share prices are vastly different.

    Quoted in your article, David Wray says that workers in larger plans that have used company stock have been "tremendously rewarded" and the company stock should be viewed in the same manner as other selections in 401(k) plans. Come again? While the rewards may, in fact, have been there, it is patently obvious that the risk profile of a single stock is simply off the charts.

    But, of course, a booming market hides many sins. In the long run, prudent diversification is probably not something that plan sponsors or employees should bet against.

    Jeffrey B. Norris

    Vice President

    Guaranteed Products Marketing

    Metropolitan Life Insurance Co.

    New York

    Small plans: We want you

    While large defined contribution vendors may be turning their backs on new business (Pensions & Investments, "Tiny DC plans go begging," April 6, page 3), there are some who actually welcome the new plan startups. The new plan market is, in fact, very different. It does require more patience, more availability and the answers to many, many more questions.

    Magna Trust in St. Louis specializes in new 401(k)s. Approximately 45% of new business results are new 401(k)s. We do not charge startup expenses of any kind.

    If the folks at Sundt Corp. had asked about our Smart K, they would have learned about our alliance of 16 (and growing) mutual fund families, our state of the art record-keeping platform with voice response system and our formalized and ongoing commitment to employee education. All at no startup cost!

    We see most corporate startups with 50 to 500 employees, as well as many unions initiating plans. If the large providers don't want to dabble in this market, that's fine; many of us do. And we even like plans with existing assets! Meet us in St. Louis!

    Joseph W. Delleville

    Vice President-401(k) Product Manager

    Magna Trust

    St. Louis

    Oppenheimer and Babson

    In the April 6 issue featuring full-service defined contribution providers, MassMutual Retirement Services' profile was missing two key components: our highly regarded investment subsidiaries OppenheimerFunds Inc. and David L. Babson & Co. Inc.

    While MassMutual Retirement Services has established alliances with several of the industry's top fund companies, we mistakenly omitted -- but are no less proud of -- our two proprietary investment companies.

    OppenheimerFunds is one of the nation's largest money managers, currently offering more than 40 mutual funds, and has extensive experience in managing mutual fund assets for individuals and institutions. David L. Babson & Co. is a well-known institutional money manager specializing in managing assets for some of America's largest pension funds.

    By combining the strength of our alliances, OppenheimerFunds and David L. Babson & Co., and MassMutual's own expertise in fixed-income money management, we believe our Concert Investment Program is one of the most diversified and sound in the business.

    Marty McDonough

    Director, Public Relations

    MassMutual Retirement Services

    Springfield, Mass.

    Technology support

    In the special report on software and other technology solutions used by investment manager (Pensions & Investments, April 20), we were pleased to see that the BondEdge system from Capital Management Sciences was cited more often than any other software product as the preferred tool for fixed-income portfolio analysis.

    We also appreciate the opportunity you reporter gave us to respond to a criticism of the Help Desk which provides technical support to our clients. The article accurately reflected the fact that we have recently expanded our Help Desk to include not only assistance with technical issues, but also to support clients in using and interpreting the analytical functions in the system.

    However, we would like to clarify an important point about the issue of client support. In addition to the Help Desk, each one of our BondEdge clients always has been assigned a senior client support representative who makes on-site visits regularly to ensure that our clients have access to all of the analytical expertise they require.

    We believe that our newly-expanded Help Desk, along with continued hands-on support from our senior client staff, will provide our clients with the best of both worlds -- a fast, complete response to telephone inquiries and personalized assistance from the senior members of our team.

    Laurie S. Adami

    Chief Operating Officer

    Capital Management Sciences

    Los Angeles

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Private Markets
    Sponsored Content: Private Markets

    Reader Poll

    July 29, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Gaining Momentum: Where Next for Trend-Following?
    The market opportunity in U.S. residential mortgage-backed securities
    Credit Indices Evolve with Enhanced Data Inputs
    Hedge Funds 2.0: Back to the future
    How Has 2022's Carnage Reshaped Global Stock and Bond Markets?
    Crossroads: Politics, Inflation, & Bonds
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    August 1, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit