Administration March 7, 2011

Consultants Expect ‘New Normal’ Economy

March 7, 2011 (PLANSPONSOR.com) – Investment consultants, expecting lower capital market returns and more volatility, support broader asset diversification and custom target-date strategies for defined contribution plans.
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A news release said that was the bottom line of a new PIMCO survey. Almost two-thirds of consultants expect a continuing “new normal” economic environment of lower capital market returns and similar or higher volatility than in the past, according to PIMCO. The majority of consultants believe that active investment management is important for all asset classes surveyed except large-cap U.S. equity, while a slight majority (55%) of consultants also believe that tactical asset allocation within a target-date strategy is at least somewhat important.

Almost all of the consultants (89%) surveyed offer custom target-date consulting services to their clients. In fact, 46% of consultants said that creating custom glide path structures is one of their top areas of business growth. What’s more, 90% believe that varying company demographics should drive unique glide paths, especially for larger organizations. Whether it be designing a custom strategy or selecting a packaged product, evaluating the glide path structure was ranked by consultants as the most important selection criterion.

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Overall, consultants reported continued growth in their defined contribution businesses.

Other findings from the survey include:

  • Consultants are split evenly on whether stable value will grow or decline in prevalence, with the vast majority (82%) anticipating plan sponsors to evaluate the investment managers underlying their stable value offerings.
  • About 78% of consultants believe their clients prefer to retain retiree assets in their plan, and about a third (32%) expect their clients to add a “deemed IRA” to their plans, allowing the consolidation of participant and spousal IRAs within the plan.
  • Most consultants (85%) said the addition of a retirement income option is likely in the next two years, yet most noted that discussions are moving slowly.
Deals and People March 7, 2011

Forward Announces Hire to Lead Alternative Investment Expansion

March 7, 2011 (PLANSPONSOR.com) - Forward Management, LLC has announced an initiative to accelerate the firm’s development of alternative investment products in both mutual fund and private partnership form.
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David Readerman will be working to expand Forward’s incubation of new investment strategies while enriching the firm’s investment research across equity product categories, according to the announcement. He will be lead portfolio manager for the first product he is helping Forward to develop, a global “go-anywhere” equity strategy.   

In addition to developing and managing alternative investment strategies, Readerman is serving as co-portfolio manager of the Forward Small Cap Equity Fund.   

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Readerman joined Forward after a seven year tenure at Marsico Capital Management, where he was a senior investment analyst with research responsibilities in global equity portfolios spanning technology, energy, consumer, and industrial sectors. He was previously a founding partner with Thomas Weisel Partners Group, Inc., and earlier led the software and Internet teams at Montgomery Securities. His twenty years of sell-side experience included stints with Shearson Lehman Hutton and Smith Barney.   

Readerman holds an MBA in Finance from New York University’s Leonard N. Stern School of Business.

According to the announcement, in recent years Forward has built a set of 15 alternative mutual funds, separate account strategies and private funds representing over $3 billion in assets out of Forward’s total of $6.7 in assets under management (as of January 31, 2011). Under the heading of “alternative,” Forward includes products that either provide exposure to alternative asset classes, such as real estate, commodities, and frontier markets, or apply alternative techniques, such as hedging and long/short investing, to equity and fixed-income strategies.

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