STAMFORD, Conn. -- Thomson Corp. has almost doubled the investment options in its $1.2 billion 401(k) plans, trying to steer participants away from an inadvertent growth bias.
Each of the company's 12 401(k) plans has the same 'investment options. On June 30, the menu of options was expanded to 14 from eight.
The six new investment options are a T. Rowe Price value fund, a Frank Russell Co. small-capitalization fund, the Putnam Investors fund and three index funds from Barclays Global Investors. (BGI also manages two fixed-income funds for Thomson's $1.3 billion defined benefit plan.)
Putnam is the record keeper and provides the rest of the services using a semibundled approach.
The decision by Thomson executives to beef up the offerings started with participant requests for a Standard & Poor's 500 index fund. That prompted Thomson to ask its consultant, Towers Perrin, Philadelphia, to look at the plans' menu of options "to see what other holes existed," said a company official, who declined to be named.
Thomson executives discovered the plan had an emphasis on growth: About $400 million, or 42%, of assets, were invested in the Putnam Voyager Fund.
"We had gotten plan participants to diversify out of fixed-income funds, but they were overly investing in equities," the official said. "We were trying to encourage some additional diversification."
In addition, Thomson executives wanted to include some non-Putnam funds in the mix.
So far, the jury is out on whether the strategy is working. In the first month, $25 million moved between and among options. Of that, 75% was directed into Putnam's large-cap growth option.
