New York State Common Retirement Fund, Albany, created a single $56.4 billion domestic equity index fund pegged to the Russell 3000 index by consolidating assets of four domestic equity index funds.
The new fund is internally managed.
Three of the four terminated funds were internally managed, and each was based on a separate Standard & Poor’s index, said Robert Arnold, director of global equities for the $182.5 billion pension fund, in an interview. The fourth, managed by BlackRock, was based on the Russell 2000 index.
“We wanted (the new index fund) to look more like our benchmark,” Mr. Arnold said, noting that the Russell 3000 index had been a longtime benchmark for the domestic equity index funds. “We wanted it to resemble the benchmark in terms of capitalization.”
Mr. Arnold said the consolidation also saved about $500,000 a year in fees thanks to the termination of the index fund — which had $2.3 billion in assets — managed by BlackRock.
Among the former internally managed funds, one was based on the S&P 500 index, and had assets of $48.9 billion; another was based on the S&P MidCap 400 index, with $3.6 billion in assets; and the other was based on the S&P SmallCap 600 index, with $1.6 billion in assets.
The pension fund had periodically looked at consolidating its domestic equity index funds as far back as 15 years ago, but it was too expensive then, Mr. Arnold said. However, as the cost of trading — and making the transition to a single fund — declined, pension plan officials decided to consolidate the funds, he said.