Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • 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
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • 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
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. DEFINED CONTRIBUTION
January 06, 2014 12:00 AM

Florida State Board moves to target-date funds for 401(a) plan

Barry B. Burr
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Updated with correction

    Florida State Board of Administration, Tallahassee, plans to offer target-date funds for the first time in the Florida Retirement System's $8.5 billion 401(a) plan, while reducing the number of active investment options to bring in more multimanager approaches, effective July 1.

    The restructuring includes dropping the plan's three risk-targeted balanced funds, mapping the assets into the 10 target-date funds. In addition, actively managed investment options will be reduced to eight from 13.

    With 44.7% of the plan's assets directed by participants into the 401(a) plan's three balanced funds, the board hopes to steer participants to more age-appropriate target-date funds to better align their risk tolerances with their career time horizons, said Dennis MacKee, director of communications.

    The FSBA plans to structure the 10 target-date funds in five-year increments, from 2015 to 2055.

    “We don't plan to pick up any new managers or drop any managers as a result of this” restructuring, although some managers' assignments and allocations will change, Mr. MacKee said.

    The FSBA, which oversees a total of $175.4 billion in assets, including the 401(a) plan, plans to map the balanced fund assets into the new target-date funds as recommended by Aon Hewitt, an FSBA investment consultant.

    BlackRock, Prudential Investments and Pyramis Global Advisors manage the conservative- and moderate-risk balanced funds, which have $666 million and $2.3 billion of the 401(a) plan's assets, respectively, while BlackRock, Jennison Associates, Prudential and Quantitative Management Associates manage the aggressive-risk balanced fund, which has $757 million in assets.

    The target-date funds will be made up of FSBA's existing 401(a) funds, selected and allocated under the discretion of Financial Engines, an FSBA investment consultant that now determines the rebalancing of the balanced funds. The target-date managers and funds haven't been selected yet. FSBA expects Financial Engines to rebalance the target-date funds at least quarterly.

    Hewitt EnnisKnupp, an FSBA investment consultant, assisted with the changes.

    Aside from the restructuring, the FSBA is considering developing and internally managing investment strategies for the 401(a). Such a move would require legislative authority. But the FSBA hasn't made a proposal for the 2014 Florida legislative session, Ron Poppell, FSBA senior defined contribution programs officer, said at a recent FSBA investment advisory council meeting.

    Among the other changes, FSBA plans to:



    • drop as separate investment options a $404 million Fidelity active U.S. growth equity fund; a $296 million active U.S. large value equity fund, managed by BlackRock and QMA; and a $136 million active U.S. large growth equity fund, managed by BlackRock and Jennison. Instead, the FSBA plans to create a combined U.S. large-cap equity fund, tilting to growth and having a passive component, that is allocated 45% to the Fidelity growth equity fund, 35% to a QMA value equity fund, and 10% each to a Jennison growth equity fund and, adding for liquidity, a BlackRock Russell 1000 value index fund.

    • drop as separate investment options a $254 million Pacific Investment Management Co. total return bond fund and a $155 million Prudential-managed high-yield fund. Instead, the board plans to create a core-plus fixed-income fund, allocated 65% to the PIMCO total return bond fund and 35% to the Prudential high-yield fund.

    • drop a $179 million BlackRock Treasury inflation-protected securities fund. Instead, it plans to offer a real assets fund, allocated 75% to a new PIMCO inflation-response multiasset strategy fund and 25% to the BlackRock TIPS fund.

    • drop as separate investment option a $414 million QMA active U.S. midcap quantitative core equity fund, $175 million Capital Research and Management's American Beacon active U.S. small-cap value fund and a $317 million T. Rowe Price active U.S. core small-cap equity fund. Instead, FSBA plans to create an active U.S. smidcap equity fund, allocated 45% to the QMA midcap fund, 30% to the T. Rowe Price small-cap fund and 25% to Capital Research's American Beacon small-cap fund.

    The FSBA plans to retain three passive investment options: a $536 million Russell 3000 index fund and an $186 million MSCI All-Country World index ex-U.S. index fund, both managed by BlackRock; and a $125 million U.S. bond enhanced index fund, managed by BlackRock and Prudential.

    In addition, it plans to retain a $72 million Pyramis intermediate-duration bond fund; a $185 million Capital Research American Beacon Euro Pacific growth fund and $235 million global large-cap growth fund; and a $911 million BlackRock money market fund; as well as a participant-directed brokerage account, managed by Hewitt Financial Services.

    The FSBA and 401(a) values are as of Jan. 5 and the individual fund values as of Nov. 30.

    Related Articles
    Careful attention needed when choosing target-date funds
    Florida keeps BNY Mellon as global custodian
    Florida SBA picks Hewitt Financial Services for brokerage option
    Florida SBA on lookout for education program consultant
    Florida SBA eyes lifetime income options for 401(a) plan
    Florida board chooses finalists for pension choice educational program
    Florida State Board selects MetLife for potential group annuity option
    Florida State Board allocates nearly $1 billion to alternatives
    American Beacon picks AHL to subadvise managed futures fund
    Recommended for You
    A key and a piece of paper that says 401(k).
    In-plan annuities more attractive to those whose 401(k)s are major retirement source — Nuveen, TIAA
    Three money bags with dollar signs on them.
    DC plans try to retain retirees, ex-employees' assets to gain more bargaining power — Callan
    Patrick Wisdom
    Most DC execs oppose alternatives investments in target-date funds
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    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
    October 23, 2023 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 Custom Content
    • 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 © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • 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
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • 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
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print