Administration November 13, 2012

BNY Mellon Master Trusts Have Strong Q3

November 13, 2012 (PLANSPONSOR.com) – The median return of the BNY Mellon U.S. Master Trust Universe was 4.66% for the third quarter of 2012.
Reported by

This drove up performance for the typical fund to 10.45% on a year-to-date basis. Given the strong quarter, the median plan climbed 15.97% during the twelve months ending September 30, 2012.  

“All asset classes were positive in Q3, but equities drove returns, with international equity setting the high-water mark at 7.32% and U.S. equities up 6.19% for the period. Over the full year, U.S. equities have significantly outperformed bonds with a 29.24% median return,” said John Houser, vice president and manager of performance and risk analytics for BNY Mellon.   

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

Ninety-nine percent of plans in the BNY Mellon Master Trust universe returned positive results during the quarter. Over the prior 12-month period, 99% (649 out of 650) of plans were in the black. More than half (55%) of plans matched or outperformed the custom policy return for Q3. For the full year, 23% of plans outperformed the custom policy.  

Corporate plans recorded the highest median return (+4.94%) for the quarter, followed closely by Public Plans (+4.80). The difference between the best performing and lowest performing plan type (Endowments) was only 0.77 percentage points.

Non-U.S. equities posted a quarterly median return of 7.32%, behind the Russell Developed ex U.S. Large Cap Index result of 7.76%. U.S. equities posted a median return of 6.19%, versus the Russell 3000 Index return of 6.23%. Non-U.S. fixed income posted a median return of 4.64%, compared to the Citigroup Non-U.S. World Government Bond Index return of 3.98%. U.S. fixed income had a median return of 2.65%, versus the Barclays Capital U.S. Aggregate Bond Index return of 1.59%. Real estate posted a median return of 2.40%, versus the NCREIF Property Index result of 2.34%.    

The average asset allocation for plans in the Universe for the third quarter was U.S. equity 28%, U.S. fixed income 28%, non-U.S. equity 15%, non-U.S. fixed income 2%, real estate 2%, cash 1% and alternatives/other 24%. 

The BNY Mellon U.S. Master Universe has a market value of more than $2.2 trillion and an average plan size of $3.3 billion. The Universe consists of more than 680 corporate, foundation, endowment, public, Taft-Hartley and health care plans. 

Administration November 13, 2012

Settlement Resolves DOL’s Madoff Suit

November 13, 2012 (PLANSPONSOR.com) – A $220 million settlement agreement resolves a lawsuit brought by the U.S. Department of Labor against four investment management firms.
Reported by

The settlement is pending approval by the U.S. District Court for the Southern District of New York and resolves department litigation, actions brought by New York’s attorney general (see “N.Y. AG Wins Settlement of Madoff Claims”) and several private lawsuits and class actions brought on behalf of plans and other investors that invested with Ponzi schemer Bernard L. Madoff. The settlement was reached with Ivy Asset Management LLC, J.P. Jeanneret Associates Inc., Beacon Associates Management Corp., Andover Associates Management Corp. and their current and former owners and officers.  

The department sued Ivy, Jeanneret, Beacon, Andover and their owners and officers in 2010 (see “DOL Sues Money Managers over Plans’ Madoff Losses”) for alleged violations of the Employee Retirement Income Security Act (ERISA). The suit alleged that they breached their fiduciary duties to a number of benefit plans by recommending, making and maintaining investments with Madoff, thus losing hundreds of millions of dollars in assets needed for the pension and health benefits of thousands of workers.    

Get more!  Sign up for PLANSPONSOR newsletters.

Ivy served as the investment adviser for Jeanneret, Beacon and Andover, and introduced those parties to Madoff. The suit also alleges that the defendants failed to take prudent actions to investigate or monitor Madoff and his purported trading and to disclose the extent of the known risks, irregularities and suspected “red flags” surrounding Madoff’s operation. Additionally, the suit alleges that the defendants failed to protect the plans’ interests while collecting tens of millions of dollars in fees for themselves as a result of the Madoff investments.   

According to the suit, plan investments were made with Madoff through direct investment and indirectly through the Jeanneret, Beacon and Andover funds that invested with Madoff. The suit further alleges that the Jeanneret defendants improperly received higher fees on the Madoff investments than other investments.  

Under the settlement agreement, Ivy and its principals have agreed to pay a total of $210 million. Jeanneret and its owners, John P. Jeanneret and Paul Perry, have agreed to pay $3 million. Beacon and Andover and their owners, Joel Danziger and Harris Markhoff, have agreed to pay $3.5 million and relinquish a claim of more than $3.3 million for management fees. 

«