BETHEL, Maine — The pension funds of 3M Co., Federal-Mogul Corp. and Valhi Inc. had the best estimated returns among corporate plans for the year ended Dec. 31, according to estimates by FutureMetrics LLC.
For five years, SLM Corp., Hecla Mining Co. and AMR Corp. had the best estimated returns. FutureMetrics, Bethel, Maine, estimated returns for some 700 corporate pension funds for their latest fiscal year. For about three-fourths of the companies, the fiscal year ended Dec. 31, said William Strauss, principal. Plans range in size from less than $100 million to billions of dollars. The FutureMetrics database represents 96% of the corporate defined benefit assets.
For the year, FutureMetrics estimated the return for 3M was 23.25%; Federal-Mogul, 21.53%; and Valhi, 19.83%. For the five years, SLM's estimated annualized return was 12.03%; Hecla, 11.08%; and AMR, 10.85%.
Dennis Duerst, 3M's director-benefit funds investments, said because of a change in reporting periods, the numbers in the company's 2004 financial reports also include the fourth quarter of 2003, "which explains why we did so well" in the FutureMetrics estimate. The estimate "wouldn't be too far off" from the St. Paul, Minn., company's actual number including the extra quarter, he added.
Without the quarter, $8.4 billion 3M's fund return was good, Mr. Duerst said the return was in excess of 13% and was better than peer comparisons; he declined to elaborate.
As for the usefulness of FutureMetrics estimating returns of corporate pension funds, Mr. Duerst said: "I wouldn't put much value in them. We have other ways of getting returns of peer groups. We don't particularly find (such comparison) useful. But companies that can more easily identify their peer groups might."
At AMR, William F. Quinn, president of American Beacon Advisors, which oversees the $7.3 billion American Airlines pension fund, Fort Worth, Texas, said the FutureMetrics estimate is close to the pension fund's actual five-year return of 10.9%. AMR's estimated five-year return was the highest among the 100 largest corporate pension plans, according to FutureMetrics.
"It's a piece of data that is interesting," Mr. Quinn said. "But unless you know what the objective is and the corporate environment, you can't make much out of it."
Of the 100 largest plans, the 20 companies with the best investment performance — a median one-year return of 15.75% — saw funding levels on average improve by 4.5%, Mr. Strauss concluded from the FutureMetrics data. The 20 companies with the worst investment performance — a median one-year return of 9.5% — saw funding levels decrease an average 0.7%.