The University of California system, Oakland, is adding three core fund options and dropping 48 investments from its lineup for three defined contribution plans as part of a continuing effort to simplify choices for participants.
The changes, which take effect July 2, cover the identical investment menus for the system's 457(b), 403(b) and 401(a) plans, which have aggregate assets of about $20 billion, said Arthur Guimaraes, associate chief investment officer and chief operating officer in the office of the CIO of the regents of the university system.
The revised lineup will contain a custom target-date fund series, 15 core funds and a self-directed brokerage account containing mutual funds.
Mr. Guimaraes said three of the core funds — Fidelity Growth Company Fund Class K and Fidelity Diversified International Fund Class K, both managed by Fidelity Investments, and Calvert Capital Accumulation Fund Class I, managed by Calvert Investments — will be new to the investment menu. Fidelity continues as record keeper.
“This is an optimization of the fund lineup,” Mr. Guimaraes said in an interview.
The 48 investment options being removed represent about $3.6 billion of the DC system's aggregate assets, he said. Participants who don't move their money from the investments will have their accounts transferred to the custom target-date series managed by the university, said a guide to participants published by the university system.
The smaller investment lineup “allows for more efficient monitoring” of investments, “with expenses that are generally lower than many similar publicly traded investment options,” the guide said.
The menu revision represents the next step in a massive restructuring of the university system's DC plans that that began in June 2013. The restructuring included the elimination of 128 retail-priced mutual funds and a re-enrollment of all participants who invested in those funds but didn't make an active choice to transfer their accounts. They were re-enrolled into target-date funds.
