Providers Team up for Fiduciary Services to Smaller Plans

AXA Equitable Life Insurance Company has partnered with Wilshire Associates Incorporated to help plan sponsors meet their fiduciary obligations in screening, selecting and monitoring investment options.

These services are available as part of AXA Equitable’s new Retirement Gateway group variable annuity designed to fund retirement plans for the small- to mid-size market.    

Wilshire offers two levels of support to Gateway clients providing sponsors with choice and flexibility. The 3(21) Series designed for those who wish to retain primary responsibility for investment selection. The 3(38) Series designed for those who prefer Wilshire to have discretion over investment selection decisions.  

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

The 3(21) option comes standard with the Gateway plan. With this service, Wilshire is responsible for selecting investment options for each asset category and recommends specific investment options for various model lineups. These model lineups provide plan sponsors choice and flexibility by allowing them to choose between pre-set menus or the option of creating a more customized lineup from a broader list of options. If sponsors follow Wilshire’s guideline recommendations and meet the Employee Retirement Income Security Act’s (ERISA’s) diversification requirements, Wilshire agrees to act as co-fiduciary as defined under section 3(21) of ERISA.  

The 3(38) Series is an optional benefit, available at an additional cost. This service gives Wilshire the authority to select and de-select investment options for a sponsor’s plan in accordance with its judgment of the performance of the investment managers. Under Section 3(38), Wilshire agrees, in writing, that it is the investment fiduciary for the plan with responsibility for investment selection and monitoring.  

“We are excited that our relationship with AXA Equitable will allow us to efficiently offer smaller businesses the independent investment advisory solutions and services we have been providing to institutional plans for decades,” said Jamie Ohl, president of Wilshire Funds Management.

Institutional Investors See Modest Gains in Q1 2011

Plans in the Northern Trust Universe advanced 3.6% at the median in the first quarter of 2011.

Northern Trust reported that Public Funds had a median return of 3.9%, slightly ahead of Foundations & Endowments, with a median return of 3.7%, and Corporate Pension Plans, which gained 3.6% at the median in the three months ending March 31, 2011.   

Northern Trust said strong performance for U.S. stocks helped push up total plan returns, with active management contributing to results. The median U.S. equity program in the Northern Trust Universe gained 6.6% in the first quarter, about 25 basis points ahead of the 6.4% return for the Russell 3000 Index of U.S. stocks. Similarly, the median manager in the Northern Trust mid-cap universe was more than 100 basis points better than the Russell Mid-Cap Index and the median small-cap manager was about 70 basis points better than Russell 2000 Index.   

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Among other asset classes, international equity was up 2.7% in the first quarter, while fixed income gained 1%, hedge funds returned about 4% and private equity was up 4.7%.  

In addition, Northern Trust data shows that across all plans, the composite allocation to U.S. equities has dropped from about 50% at year-end 2000 to about 35% in the first quarter of 2011. Fixed income has seen a modest increase in allocation from 27% to 30% over that same time period. The composite allocation to hedge funds, just above zero in 2000, has risen to 4.3% in 2011, while the allocation to private equity has increased from 3.5% to 6% across all plans in that time.   

The Northern Trust Universe represents the performance of about 300 large institutional investment plans, with a combined asset value of approximately $706 billion, which subscribe to Northern Trust performance measurement services.

«