In what is billed as a first, three of the most prominent stable value investment management firms have joined forces under a single umbrella to jointly manage stable value portfolios for defined contribution plans.
The Galliard Alliance combines the active bond management of natural competitors Pacific Investment Management Co., Newport Beach, Calif.; and Sanford C. Bernstein & Co., New York; and stable value asset management from Galliard Capital Management, Minneapolis.
Galliard will manage 20% of the assets in a traditional stable value fund and provide centralized administration and marketing.
Galliard also will monitor the performance of the two active bond managers, and will establish investment objectives, guidelines and benchmarks for the portfolio. Bernstein and PIMCO will each manage 40% of the portfolio in actively managed synthetic stable value funds.
Karl Tourville, Galliard president, said the alliance will provide investors with a "full bundled approach" using two complementary bond managers with differing styles.
"We believe this type of approach will dominate the market in the next five years," said Mr. Tourville. "We are going to change the industry with this."
Jason Psome, managing director at Bernstein, said the approach is already being used by large plans in structuring their funds. He said the Galliard Alliance is a finalist in four stable value manager searches.