Products April 1, 2013

Munder, Aston Partner in Fund Launch

Aston Asset Management LP partnered with Lee Munder Capital Group LLC to debut a mutual fund, the ASTON/LMCG Emerging Markets Fund.
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The fund seeks to provide long-term capital appreciation by investing in emerging markets in Latin America, Eastern and Southern Europe, the Middle East, Africa and Asia. The fund will be offered in I shares (ALMEX) and N shares (ALEMX). Lee Munder Capital Group is the sub-adviser.

Under normal market conditions, at least 80% of the fund’s portfolio will be invested in equity securities including depositary receipts representing companies listed in the MSCI Emerging Markets IMI Index.

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The fund will also invest in the securities of exchange-traded funds (ETFs) and exchange-traded notes (ETNs) that track an emerging market index. Lee Munder’s emerging markets investment philosophy is a bottom-up, quantitative approach. It seeks to exploit inefficiencies in the market by identifying stocks with attractive valuations that also have good growth prospects and high quality of earnings. By selecting stocks that rank well on a variety of metrics, the firm’s investment strategists aim to diversify its source of returns in different market environments. 

“We are committed to selecting experienced, boutique investment managers with proven expertise in distinct areas of the market to help us bring new strategies to mutual fund investors,”

Aston believes the fund will give investors an effective alternative to the equity markets of developed countries, said Stuart D. Bilton , chairman and chief executive of Aston. “Our experience working with Lee Munder Capital Group has shown us their strong capabilities,” Bilton said.

Emerging markets offer significant growth potential in the years ahead, according to Kenneth L. Swan , CEO of Lee Munder Capital Group. “Today, emerging markets are more than the ‘BRICS’—Brazil, Russia, India, China and South Africa,” Swan said. “We see opportunities in many places including, Korea, Taiwan, Mexico, Malaysia and Thailand.”

Aston is an investment management firm with headquarters in Chicago.

Data & Research April 1, 2013

Consultants Make Suggestions for DC Plan Investments

Ninety-eight percent of defined contribution (DC) investment consultants polled recommend clients offer a target-date or target-risk investment tier.
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According to PIMCO’s 7th Annual Defined Contribution and Consulting Support and Trends Survey, more than half (51%) of consultants believe a custom target-date approach is an improvement over current packaged funds. Eighty-one percent suggest the addition of Treasury inflation-protected securities (TIPS) to reduce risk in asset-allocation strategies.  

If plan sponsors decide to use managed accounts, the majority of DC investment consultants (55%) say they should be offered as an opt-in asset allocation choice only. Nearly one-third (32%) of consultants do not recommend managed accounts, while only 12% recommend them as the opt-out investment default.  

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Consultants rank evaluation of the glide path structure as most important in the selection or designing of target-date strategies.

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DC Plan Investment Structure  

On average, nearly all firms surveyed by PIMCO (96%) recommend clients offer one capital preservation option and two fixed income options in their plans, and 94% recommend six equity options. One inflation-hedging option (83%), a global balanced strategy (47%) and an alternative strategy (36%) were also selected frequently.   

Firms believe emerging market debt (61%), followed by commodities (49%) and risk mitigation strategies (e.g. tail-risk hedging) (45%) would bring the most value as added classes within an asset allocation strategy. Firms believe global or non-U.S. equity (59%), TIPS (47%), global or non-U.S. fixed income (43%) and diversified real assets (41%) would bring the most value as added asset classes within the core investment lineup of a DC plan.  

More than three-quarters of firms either actively promote (22%) or support (55%) client interest in re-enrollment.  

In order of importance, the three ways consultants believe plan sponsors can minimize litigation risk include documenting investment policies and processes, evaluate and confirm reasonable plan investment fees, and established an engaged DC investment oversight committee.  

For survey highlights or other PIMCO DC publications, call 888-845-5012 or email pimcodcpractice@pimco.com.

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