Investing May 26, 2000

Launch Approaches for New S&P Index Classifications

May 26, 2000 (PLANSPONSOR.com) - Plan sponsors could soon see some performance shifts following the introduction of a new sector classification system. Standard & Poor's will spend the next four to five weeks validating a new calculation for the S&P indices using the Global Industry Classification Standard that the company launched with MSCI last August.
Reported by

Originally planned for a June 1 launch, S&P will now release the new calculation process for the indices at the end of the validation period.

Standard and Poor’s has completed the five-year history using the new system. It will calculate both the new and old groupings for a transition period. The new classifications were developed to ease the investment research and management process for financial professionals worldwide.

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The re-classifications could impact performance comparisons against specific sectors within the indexes, though the securities within the indexes themselves will not change as a result of the reclassification.

The Global Industry Classification Standard consists of 10 economic sectors aggregated from 23 industry groups, 59 industries, and 123 sub-industries covering almost 6,000 companies globally. 

All Sectors now have a two-digit identification code, all Industry Groups have a 4-digit identification code, all Industries have a 6-digit identification code and all Sub-Industries have an 8-digit identification code.

Investing May 25, 2000

Defined Contribution Assets Top $2 Trillion in 1999

May 25, 2000 (PLANSPONSOR.com) - Corporate defined contribution plans continued their steady growth in 1999, reaching $2.4 trillion in assets, according to the Spectrem Group.
Reported by

The research and consulting firm said that defined contribution plans now represent half of all corporate retirement plan assets. Of the total, $1.4 trillion is made up of 401(k) plan assets.

The report also found:

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  • plan sponsors are overall content with their plan providers; only 2% of the 635 sponsors interviewed for the study indicated they would definitely switch vendors for a 15% fee reduction
  • mutual fund providers are still growing their market share and now control 39% of full-service plans
  • plan savings continue to shift into equity investments; assets in equity funds and company stock represented 63.5% of the total, up from 55.3% in 1997
  • with increasing concentration of assets in equities, performance will remain a key determinant of satisfaction among plan sponsors
  • recordkeeping is still a hot button for plan sponsors, with sub-standard service in this area a major reason for switching vendors.

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