Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 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
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Print
November 12, 2007 12:00 AM

UBS puts its weight behind move into DC market

Money management giant moves quickly with target-date funds, semibundled services

Jenna Gottlieb
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    UBS’ Drew Carrington believes the time is right to make a mark in the DC market.

    CHICAGO — Executives from the world’s largest money manager are making a run for defined contribution assets.

    And they are moving fast.

    Since UBS Global Asset Management, Chicago, launched its DC group in June, officials there have wasted little time in rolling out target-date funds, and partnering with a record keeper to offer semi-bundled services to DC plans.

    Drew Carrington, executive director and head of defined contribution and retirement solutions at UBS Global Asset Management, said the time is right to move into the defined contribution market.

    UBS’ first step was to roll out target-date funds in August that adopted the strategy of incorporating Treasury inflation-protected securities into these funds. That’s necessary because target-date funds sometimes rely too heavily on equity, Mr. Carrington said.

    “We believe what participants need most is inflation-adjusted, longevity-protected replacement income, which will guide them closer to covering their retirement needs,” he said.

    “We don’t have to dethrone Fidelity (Investments) or Vanguard (Group) to be a success,” Mr. Carrington said. “It’s not a requirement that we immediately become the largest manager of DC assets to be successful.” He declined to say if UBS had any market-share targets.

    “We have a business plan, and our goal in the first year is to create some buzz around the products to get plan sponsors and consultants interested in what we are saying. We’ve had a couple good talks so far,” he said, declining to name any potential clients.

    The decision to enter the defined contribution market followed conversations with UBS’ defined benefit plan clients, he said.

    “In many instances, as plan sponsors contemplated making changes to their DB plan, such as making investment changes, reducing the benefits available by freezing, closing, looking to terminate, they wanted to make changes to their DC plan as well. I’d say 60%-80% of sponsors that make changes to their DB are making DC plan changes as well. That’s why we put together a task force to convert our strengths of asset management in the DC space,” he said.

    Mr. Carrington said UBS’ competition will come more from investment-only shops like AllianceBernstein Inc., New York, and Barclays Global Investors, San Francisco, than from bundled providers.

    “We’ll run into the usual suspects. Fidelity and Vanguard won a lot of business in the first-generation products, but over time, a number of plan sponsors will go back and revisit their first-generation solution. We’re more likely to be compared to firms like AllianceBernstein and BGI,” he said.

    UBS is looking to target plans with $500 million or more in assets.

    “That is really our sweet spot, but it’s not a hard floor. With automatic enrollment on the rise, there are smaller plans we would consider doing business with,” he said.

    Following the launch of the target-date funds, UBS’ next step was to partner with a record keeper, Affiliated Computer Services Inc., said Mr. Carrington (Pensions & Investments, Oct. 15).

    “We went out and looked for a non-manufacturing record keeper. This way, we can address plan sponsors about the full spectrum of their retirement plan needs. Partnering with ACS, they take care of the administrative side and we, of course, focus on the investment side. It’s not quite bundled, but it’s a preferential arrangement,” said Mr. Carrington.

    “Plan sponsors and not in the business to be plan sponsors. They are employers seeking to offer benefits to attract and retain employees,” said Mr. Carrington.

    Next up is addressing the longevity issue, with annuities possibly playing a role.

    “We’re looking at longevity as a critical piece of the puzzle. There isn’t an effective combination of longevity investing and target-date funds out in the market. We’re working on what we could do in that space,” said Mr. Carrington, declining to elaborate.

    However, BGI recently rolled out longevity-based target-date funds (P&I, Oct. 15). It is offering an annuity as part of a multipart investment option called SponsorMatch. Unlike a typical target-date fund, when a SponsorMatch fund matures, participants get annuity payments from age 65 until death. Like target-date funds, the SponsorMatch funds’ asset allocation changes over time, with the annuity allocation starting at 5% at age 25 and growing to 53% at retirement.

    Of its competitors, Mr. Carrington said, “We know what we do well and we believe we could put out the best, most unique product to the market.”

    UBS executives also are considering offering customized target-date funds to megasized plans.

    “There’s a lot of ground shifting in this space right now. Mega and jumbo plans want to do it themselves. We will look at a next generation of those solutions as well,” he said, declining to elaborate.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Gender diversity is improving on FTSE 350 boards
    Gender diversity is improving on FTSE 350 boards
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    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
    December 12, 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 © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 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
      • 2023 Defined Contribution East
      • 2023 ESG Investing