Kraft Foods Group Inc. plans to begin a new liability-driven investment strategy this year to reduce volatility in its $5.5 billion U.S. defined benefit plan, according to the company’s latest 10-K filing.
The company will phase in the strategy over the next several years and will aim to invest in a mix of about 80% fixed income and 20% equities.
According to the company’s 2012 10-K, filed on March 21, 36% of U.S. plan assets were invested in fixed income as of year-end 2012; 61% in equities; and 3% in real estate.
On Oct. 1, Kraft Foods Inc. changed its name to Mondelez International Inc. and spun off Kraft Foods Group, the company’s American grocery business. As part of the spinoff, Kraft Foods Group assumed $7.99 billion of worldwide benefit obligations and $6.04 billion of plan assets from Mondelez.
Kraft Foods Group says it expects to make $420 million in contributions to its U.S. plans in 2013 and about $205 million to its non-U.S. plans during the year.
As of Dec. 29, U.S. plan assets totaled $5.46 billion with a funding ratio of 76.6%; non-U.S. plan assets totaled $1.09 billion with a funding ratio of 76.8%.
Calls to Kraft Foods Group were not returned.