Products August 15, 2014

AllianceBernstein Plans Multi-Manager TDFs

A new target-date fund series will be co-managed by Morningstar Associates and AllianceBernstein, and boasts a diverse cast of managers, including Franklin Templeton and PIMCO.
Reported by

The AllianceBernstein Multi-Manager Select Retirement Funds offer access to high-quality managers, based off assessments delivered through Morningstar Associates’ independent investment selection process. The goal is to deliver a better target-date design to plan sponsors and participants by working with industry peers, AllianceBernstein says.

The new multi-manager target-date funds address issues that the Department of Labor (DOL) identified in its “Tips for ERISA Plan Fiduciaries,” noting that non-proprietary target-date funds could offer advantages to plan participants by diversifying their exposures among different investment providers.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The series will incorporate a range of asset classes, including those that seek to provide diversification to stocks and bonds, with the aim of delivering more consistent results and mitigating short-term risk. AllianceBernstein will design and manage the glide path, adjusting asset-class exposures as market conditions change, and will also provide overall program oversight. Morningstar will select funds from the broad offerings of each participating firm.

Over the past decade, the landscape for target-date portfolio design and construction has evolved, says Daniel Loewy, chief investment officer and co-head of AllianceBernstein’s multi-asset solutions unit. “We’ve spent that time building defined contribution products of the future at AllianceBernstein,” he says. “Today, we have access to new asset classes and tools to solve some of the challenges presented by the traditional target-date approach.”

The series will invest in funds managed by investment managers at AQR, Franklin Templeton, MFS and PIMCO. The funds are expected to be available for purchase by early November 2014.

AllianceBernstein LP is a global investment management firm with $477 billion in assets under management. Morningstar Associates LLC is a registered investment adviser (RIA) and wholly owned subsidiary of Morningstar Inc.

The Markets August 15, 2014

Largest Corporate Pensions Lost Ground in July

The funded status of the largest corporate defined benefit (DB) pension plans decreased by $5 billion during July, according to data from Milliman, Inc.
Reported by

The Milliman Pension Funding Index (PFI) tracks the nation’s 100 largest corporate-sponsored defined benefit pension plans and is updated monthly. During the month of July, these plans experienced a $3 billion decrease in pension liabilities and an $8 billion decrease in asset values, resulting in a $5 billion increase in the pension funding deficit.

By the end of June, the deficit rose to $257 billion, primarily due to declines in equity and fixed-income returns. As of July 31, the funded ratio declined marginally to 85.0%, down from 85.3% at the end of June.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The projected benefit obligation (PBO) decreased by $3 billion, lowering the Milliman 100 PFI liability value to $1.708 trillion, down from $1.711 trillion at the end of the previous month. The PBO change resulted from an increase of two basis points in the monthly pension contribution discount rate, which reached 4.10% for July, up from 4.08% in late June. July marked the second consecutive month where the discount increased. Rising discount rates have the effect of lowering the amount of contributions required today to fund benefits years down the road, Milliman explains. 

The market value of assets held by the Milliman 100 pension plans decreased by $8 billion as a result of July’s investment loss of -0.24%. As a result, the Milliman 100 PFI asset value decreased to $1.451 trillion, down from $1.459 trillion at the end of June.

From August 2013 to July 2014, the Milliman 100 PFI funded status deficit has worsened by about $36 billion. The drop in funded status over the past 12 months is primarily due to the decline in interest rates. Since July 31, 2013, the discount rate has dropped 63 basis points, to 4.10% from 4.73%. The funded ratio of the Milliman 100 companies has decreased over the past 12 months to 85.0% from 86.0%.

The results of the Milliman 100 Pension Funding Index are based on the actual pension plan accounting information disclosed in the footnotes to the companies’ annual reports for the 2013 fiscal year (and for previous fiscal years).

More information about the July index findings can be viewed here.

«