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Rating:Payden & Rygel Taps Fellow Californian To Subadvise Target-Date Funds Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, July 16, 2007

Payden & Rygel Taps Fellow Californian To Subadvise Target-Date Funds

News summary by MFWire's editors

Payden & Rygel has rolled out target maturity funds that make use of the investment research of Santa Monica-based Wilshire Funds Management. The Payden/Wilshire Longevity Funds consist of four funds that come with maturity dates ranging from 2010 to 2040. Gregory Brown, principal at Los Angeles-based Payden & Rygel, said the new funds differ from other target-date products in the market in that they invest portfolios "more dynamically after the retirement date is reached."


LOS ANGELES, July 16 /PRNewswire-FirstCall/ -- Payden & Rygel today announced the launch of an innovative series of target maturity funds utilizing the investment research of Wilshire Funds Management, the global investment management business unit of Wilshire Associates Incorporated.

The Payden/Wilshire Longevity Funds consist of four target maturity funds that are designed to take investors through retirement rather than just to retirement. The four new funds are: 2010, 2020, 2030 and 2040. Target maturity funds have become increasingly popular in recent years, particularly as investment options within 401(k) plans and other defined contribution retirement vehicles. The Payden/Wilshire Longevity Funds represent an improvement to current target maturity offerings, differing in a number of key ways from most of the competition.

"Up until now, most target maturity funds have been designed to manage retirement assets for individuals until they reach their retirement age, but not afterwards," said Gregory P. Brown, CFA, principal at Payden & Rygel and the firm's lead in launching the new fund family. "This is not just another target retirement product. The Payden/Wilshire Longevity Funds elevate long-term investing far beyond current offerings by investing portfolios more dynamically after the retirement date is reached."

Wilshire's research on current offerings in the target maturity fund space found that many glide paths turn conservative too quickly, while others blindly take on unacceptable risk, disregarding the investor's liabilities and funding status. Recognizing these limitations, Payden has developed the Payden/Wilshire Longevity Funds to manage participant portfolios for a lifetime, not just to a target retirement date.

"By incorporating key principals from the defined benefit world, carefully mapping the journey from capital appreciation to capital preservation, and employing a unique asset allocation approach that utilizes 'surplus optimization' we believe we've pioneered a new path in the defined contribution marketplace," says Greg Brown.

The blending of the traditional asset-only efficient frontier with the liability-aware surplus frontier is a proprietary technique developed by Wilshire. The surplus frontier is the curve that gives preference to asset classes that will maximize the likelihood of having a surplus starting at retirement. The asset frontier is best suited early in a participant's investment horizon when capital appreciation is critical; while the surplus frontier accounts for later in the cycle nearing and during retirement when the risk of a catastrophic loss can mean the difference between a shortfall or surplus. By effectively blending both frontiers to create a modified approach, participants' accounts are carefully moved from capital accumulation to capital preservation at the appropriate times.

The Payden/Wilshire relationship draws upon the relative strengths of each firm, providing investors with a true one-step solution backed by global investment management capabilities and leading quantitative investment analysis.

"Working with Payden is a natural fit," noted Lawrence E. Davanzo, senior managing director, Wilshire Associates and head of Wilshire Funds Management. "The organizations compliment each other and we see great potential for the Longevity Funds as a new offering in the 401(k) plan sponsor world."

The two firms share responsibilities based on their core capabilities. Payden will lead the distribution and servicing effort for the Longevity Funds, focusing on financial intermediaries and third party administrators in the defined contribution market. Wilshire will serve as sub-advisor, responsible for construction of the portfolios, including the asset allocation, the selection of the underlying investments, and the ongoing adjustments to the glide path.

The funds are designed for investors expecting to reach the age of 65 near the year indicated in the name of the fund. Each Longevity Fund operates with a fund of funds structure that invests in underlying funds, including Payden fund offerings and other core and specialty options, ETFs, and individual securities.

About Payden & Rygel

Payden & Rygel (payden.com) is one of the largest global independent investment managers in the U.S., with more than $50 billion in assets under management. Since 1983, the firm has advised corporations, foundations, endowments, pension plans, public funds and individual investors on their overall investment strategies. Payden & Rygel offers a full array of investment strategies, including U.S. and global fixed-income and equity, as well as leading edge absolute-return strategies. Headquartered in Los Angeles with offices in Phoenix, London, Dublin, Frankfurt and Hong Kong, Payden & Rygel is adviser to the Paydenfunds family of U.S.-based mutual funds and to the firm's Irish-domiciled funds. 

Edited by: Armie Margaret Lee


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