Investing February 4, 2004

Master Trust Turns in 22.61% 2003 Performance

February 4, 2004 (PLANSPONSOR.com) - The median return for the 498 corporate, foundation/endowment, public and Taft-Hartley funds in the Russell/Mellon US Master Trust Universe roared ahead by 22.61% in 2003.
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According to a news release, the Universe’s median total fund also beat the 20.87% annual return of its benchmark (Russell 3000 Index 50%, LB Aggregate 40%, MSCI World ex-US 10%). Approximately 64% of the plans outperformed the benchmark for 2003.   The US Master Trust Universe represents a market value of $1.4 trillion with an average plan size of $2.7 billion.

“Strong performance in the overseas markets helped fund sponsors achieve a strong recovery in 2003,” said Tim Clark, Russell/Mellon senior client relationship manager. “Public plans had the highest returns of all plan types for the year and quarter.”

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All but one asset class beat their respective benchmark last year, according to the announcement.   Leading the way, the median plan in the non-US Equity asset class showed a 37.85% gain and still bested the MSCI World ex-US Index (40.01%).  

Next, the US Equities, which returned 32.02%, outperformed the Russell 3000 Index (31.06%).    Fixed Income brought up the rear with non-US Fixed Income (23.37%) outperforming the Citigroup World Government Bond Index non-US (18.52%) and US Fixed Income returned 5.61%, beating the LB Aggregate return of 4.10%. In the final quarter of 2003, the 8.73% median return of the US Master Trust Universe beat the benchmark of 8.05%. Approximately 66% of the plans outperformed the benchmark during the fourth quarter.

Non-US Equity drove fourth quarter performance with a 15.91% return but lagged the MSCI World ex-US Index’s 17.04% return. The median plan in the US Equity asset class followed with a 12.62% performance compared to the Russell 3000 Index’s 12.43%.   Non-US Fixed Income (6.46%) underperformed the Citigroup World Government Bond Index non-US (6.71%) and US Fixed Income returned 0.74%, which beat the LB Aggregate return of 0.32%.

The average asset allocation in the US Master Trust Universe for the fourth quarter changed slightly mainly because of increases in overall plan performance.   The average now is US Equity 42%, US Fixed Income 24%, non-US Equity 19%, non-US Fixed Income 2%, Alternative Investments 5%, Real Estate 3%, Cash 2%, and Other (Private Equity, Oil, Gas, etc.) 3%.

Administration February 3, 2004

Regulators Focus on RS for Market Timing

March 2, 2004 (PLANSPONSOR.com) - The latest financial services firm to feel the steely eyes of federal and state regulators upon it for its mutual fund trading practices is apparently a San Francisco-based company.
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RS Investments said in a US Securities and Exchange Commission (SEC) filing that the SEC’s staff has made a preliminary determination to bring civil enforcement action against it over market-timing in its flagship $1.6 billion RS Emerging Growth Fund, according to the Associated Press.

New York State Attorney General Eliot Spitzer’s is also investigating RS Investments. The firm said it is discussing the matter with the SEC and Spitzer’s office.

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Morningstar analyst Chris Traulsen said in a recent report that the Emerging Growth fund’s prospectus doesn’t place any limits on an investor’s ability to trade its shares. He noted that the firm’s policy was to permit trading in the fund by existing shareholders as long as it wasn’t “disruptive.”

RS was founded in the early 1980’s as a subsidiary of investment bank Robertson, Stephens & Co., but has been on its own since 1999. It offers 10 mutual funds and manages about $7.2 billion in assets. RS Investment Management, L.P. is the investment advisor to RS Investments mutual funds.

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