Bedrijfstakpensioenfonds Metalektro, Schiphol, Netherlands, will invest a total of 1.2 billion euros ($1.3 billion) in emerging market and high-yield debt, the 1.7 billion euro plan's first allocation to those fixed income styles, said Roland Van Den Brink, managing director. Details about the individual mandates were not available.
The portfolios will be funded from reducing exposure to European government bonds, he said. The move is part of a strategy to increase returns by investing in non-investment-grade debt. The plan currently has no exposure to non-investment-grade investments.
"Government bonds are now yielding between 4% and 5%, and that is too low to cope with the required liabilities. That, and the fact that the timing looks good, is why we decided to invest in non-investment grade credits," said Mr. Van Den Brink.
Honeywell International Inc., Morristown, N.J., expects ongoing expenses related to its $10 billion pension fund to cut 36 cents per share off the company's earnings this year, projected at $1.60 to $1.70 per share, Honeywell officials said today. The company announced a $330 million contribution to the plan.
Rep. Earl Pomeroy, D-N.D., introduced legislation that would let working couples roll over their retirement savings from employer-sponsored plans into a spouse's retirement plan when changing jobs.
The Retirement Account Portability Improvement Act would also let workers move their retirement money from employer plans directly into annuities or Roth IRAs without having to first set up traditional IRAs. And, it would shorten the vesting period for voluntary employer contributions to employee's 401(k)-type retirement accounts to three years from five.
AK Steel Corp., Middletown, Ohio, took a $484 million non-cash charge in the fourth quarter to account for a drop in the value of its $2.4 billion pension plan. The charge of $4.49 per diluted share for the quarter comprises 96% of the company's reported $502 million loss for the year ended Dec. 31, said Alan H. McCoy, spokesman. He blamed poor stock market returns and low interest rates for the decline. AK Steel also made a $31 million contribution to its defined benefit plan in 2002. Mr. McCoy declined to say how the contribution was invested.
On Thursday, AK Steel's $1.13 billion offer for bankrupt National Steel Corp. was accepted over a $950 million bid by U.S. Steel. Neither bid included National Steel's pension plan, which is underfunded by $1.5 billion and recently was taken over by the PBGC.
Both AK Steel and U.S. Steel have proposed bringing current National Steel workers into their respective retirement plans, with the PBGC taking over benefit payments to National Steel retirees.
Indiana Public Employees' Retirement Fund, Indianapolis, is searching for a fixed-income officer to oversee external managers and who also could eventually manage a new internal $250 million TIPS portfolio, said Patricia J. Gerrick, CIO. The $9 billion fund also is searching for a compliance officer to oversee the custodial relationship, performance analysis, brokerage policy, proxy voting and securities lending. Both are new positions.
Brian S. O'Neil was named CIO of the $8 billion Robert Wood Johnson Foundation, Princeton, N.J. He will replace John Gilliam, who plans to retire by midyear. Mr. O'Neil was head of the funds management group at Equitable Life Assurance Society.
His responsibilities have been assumed by other Equitable staff members and he will not be replaced, said spokesman Jeff Tolvin.
Willamette University, Salem, Ore., hired Harris Associates and K2 to run $5 million each in absolute-return strategies, and INVESCO and HarbourVest to manage $5 million each in private equity, said Jeff Eisenbarth, vice president financial affairs and treasurer. The $186 million endowment also hired Common Sense Investment Management to manage an active domestic equity portfolio, pending contract negotiations; he did not provide further details. Funding for the five allocations will come from rebalancing, he said. R.V. Kuhns advised.
Northern Trust completed the first part of its acquisition of Deutsche Bank's global passive asset management business, said Terry Toth, executive vice president of Northern Trust Global Investors.
The original purchase price was $260 million; Mr. Toth would not say what Northern ultimately paid. It was rumored this week that the deal might not go through because client retention was low, reducing the deal's minimum asset threshold. Missy DeAngelis, spokeswoman for Deutsche Asset Management in the Americas, declined to comment.
Jim Creighton, who headed the passive business at Deutsche, will become global CIO for passive and enhanced products at NTGI, Mr. Toth said.
City National will acquire Convergent Capital Management for $49 million, including cash and the assumption of about $7.5 million in debt. The acquisition doubles City National's assets under management to about $14 billion, according to a company statement. Convergent will continue to operate independently, and Richard H. Adler will remain Convergent's president and CEO.
Rice, Hall, James & Associates and Northern Capital Management, affiliates of Old Mutual's U.S. asset management group, were bought back in separate agreements. The transactions are scheduled to close in the first quarter; terms were not disclosed.
Since Old Mutual bought United Asset Management in 2000, 19 affiliates have been divested; Scott Powers, CEO of Old Mutual's U.S. asset management group, said the latest buyouts should be the last. "We believe these sales put our group near the optimal level of balance between the need to focus our efforts on core operations while retaining appropriate diversification in the range of investment strategies of our firms," he said.
Rice Hall has $1.7 billion in assets under management, and Northern Capital has $1.2 billion. Old Mutual's U.S. asset management group now has 21 affiliates and a total of $124 billion in assets under management.
David S. Pottruck will become the sole CEO of Charles Schwab Corp. at the company's annual meeting May 9. Mr. Pottruck has been president since 1992 and co-CEO since 1997 with Charles R. Schwab, who will remain chairman.
Kenneth Anderson was promoted to CEO at ABN AMRO Funds, Chicago; he had been COO. He assumed the CEO duties of Stuart D. Bilton, who remains chairman of the funds group. Mr. Anderson will remain president of ABN AMRO Investment Fund Services Inc. and executive vice president of ABN AMRO Asset Management USA. Gerald F. Dillenburg was named COO; he will remain CFO of the fund group and senior managing director of related companies.
Separately, Thomas J. Marthaler was promoted to director of fixed income at Chicago Capital Management, an ABN AMRO company, and ABN AMRO Asset Management (USA) LLC, both in Chicago. He replaces Frederick W. Engimann, who will retire early next year. Mr. Marthaler was director of fixed-income research and trading and will retain those duties, said Janice Aman, a spokeswoman.
Oklahoma City Employee Retirement System is conducting shortlist searches for two active domestic small-cap equity managers to run $16 million each, one in growth and one in value, said Rena Hutton, retirement system manager. Funding will come from terminated active domestic equity managers Tom Johnson, which ran $28 million in large-cap value; Janus Capital, which handled $14 million in large-cap growth; and Nicholas-Applegate, which managed $13 million in midcap growth. The terminations were due to a shift in the $326 million pension plan's strategy to small cap and were not performance-related, she said.
Plan officials will decide how to allocate the remaining assets within the next two to three months, she said.
Until the money is reassigned, $32 million is being held in a temporary passive Russell 2000 index fund, and the remaining $23 million was temporarily placed in an S&P 500 index fund, both run by State Street Global Advisors. The S&P 500 fund now has $121 million in assets, she said.
The plan's asset allocation is 60% equity and 40% fixed income. Asset Consulting Group advised.
Asbestos Workers, Local 17, Chicago, in early March will conduct a biannual review of the managers of its $110 million pension plan, said John Crinion, chairman of the board. The plan's asset allocation is 55% equity and 45% fixed income. Becker, Burke will assist.
The plan's equity managers are Chicago Asset; Killian Asset; Northern Trust; Ariel Capital; and Turner Investment, confirmed Margarett Gorodess, executive consultant at Becker, Burke. Its fixed-income managers are Great Lakes and NISA Investment Advisors ULLICO manages a mortgage fund for the plan, and John Buck manages a real estate portfolio.
Institute of Electrical & Electronic Engineers Inc., Piscataway, N.J., is conducting an asset allocation study of its $60 million pension plan, which will be finished in March, said Michael J. Sosa, staff director of investments. It is doing so because of turnover among plan officials, Mr. Sosa said.
The plan's current allocation is 50% domestic equity, 30% fixed income and 20% international equity. Callan Associates is advising.
Rinker Materials Corp., West Palm Beach, Fla., is conducting a shortlist search for a manager of managers and custodian for its three pension plans, which have a combined $28 million in assets, said Frank LaPlaca, director of human resources and benefits. Diversified Investment Advisors, the current manager of managers and custodian for the $8 million hourly and $12 million salaried pension plans, will be allowed to rebid, Mr. LaPlaca said. Plan officials decided to conduct the search because they want the same manager to handle the existing plans and the $8 million pension plan for newly acquired Kiewit Materials Corp., he said. Wilmington Trust is sole investment manager for the Kiewit plan, and State Street Corp. is custodian, he said. State Street may be asked to rebid, but there are no plans to ask Wilmington to rebid, he said.
Ameritas Holding Co., Lincoln, Neb., is reviewing the investment options in its $121 million 401(k)/profit-sharing plan, said Kent Mattson, assistant vice president-compensation and benefits. The annual review will be finished by the end of the first quarter. The plan, which is run internally, has 21 investment options, he said. It is not using a consultant.
Valassis Communications Inc., Livonia, Mich., in April will begin a review of the 16 investment options in its recently combined $96 million 401(k)/profit-sharing plan, said Mary Stencel, benefit plan supervisor. Plan officials will complete the review by June and will not use a consultant, she said.
J.P. Morgan/American Century is bundled provider.
John Wiley & Sons Inc., Hoboken, N.J., in March will begin an asset allocation study of its $50 million pension plan, the first in several years, said Walter J. Conklin, vice president and treasurer. It will be finished at the end of March, he said. The plan's current asset allocation is 60% equity and 40% fixed income. Buck Consultants will advise.
INVESCO Retirement later this year plans to launch an asset-allocation modeling tool for defined contribution plan sponsors that are serviced by the firm, said Hubert L. Harris Jr., CEO. The program is expected to be a dynamic asset allocation model that INVESCO will have developed by a third-party adviser, Mr. Harris said.
"We believe unsophisticated investors would benefit from selecting a targeted retirement product and let the professionals do it," Mr. Harris said. "So many employees chase performance and go in when the party is over. They jump just at the wrong time."
Fund managers around the world still think equities are undervalued, but their historically low cash levels could limit their ability to take advantage of these valuations, according to the January Merrill Lynch Fund Manager survey of 307 managers that handle a total of $780 billion. The number of respondents who think global stocks are cheap rose to 27%, from 21% in December. The average cash balance among respondents fell to 4.2% of total assets under management, from 4.4% in December and 4.6% in November. Excluding hedge funds, institutional and retail fund managers' cash levels are among the lowest ever recorded in the survey.
Three out of four mutual fund firms have changed their stock valuation approaches since April 2001, when the SEC urged asset managers to review fair valuation methodologies, according to a Deloitte & Touche survey. The survey of 67 mutual fund firms found that 66% of firms with more than $75 billion in assets under management established triggers to determine if market fluctuations have occurred; 23% of firms with less than $75 billion under management have taken this step.
Investment Technology Group plans to launch an after-hours cross in mid-February through its POSIT equity matching system. POSIT will run the cross once each day after 6: 30 p.m. EST. The cross will use the primary market closing price for listed stocks and the primary closing price for Nasdaq stocks. All executions will be next-day trades, according to ITG. Along with the new after-hours match will be advanced news and price filtering capabilities that monitor for stocks that are materially affected by news developments.