In a move that emphasizes the importances of both alliances and technology, Delaware Investments of Philadelphia, Pennsylvania has launched its new multi-manager product entitled SpectrumSolutions. This new service will allow clients to access outside funds, but only those that are on the National Securities Clearing Corporation's (NSCC's) system.

"There are two irreversible trends in the 401(k) marketplace," Mary Barneby, president of Delaware Investments' Retirement Financial Services, told InvestmentWires. "People are looking for more than one fund family in which to invest. The market demands more. And there is a concern among participants and sponsors about the cost ratios of funds."

"We were looking to provide high quality brand name funds with institutional pricing. We wanted to choose managers that had expertise and skill managing funds. We did not choose the obvious big names. We choose managers that we felt would be a good fit," she contended.

The new partners include: Morgan Grenfell; Standish, Ayer & Wood, Inc.; Warburg Pincus Asset Management; Lazard Asset Management; Jones & Babson; and Goldman Sachs Asset Management.

"It was important for us that potential partners meet our needs stylistically and technologically," Barnaby added.

All of Delware Investments' partners will have to participate on the Defined Contribution Clearance & Settlement Service (DCC&S) from NSCC. This allows users access to the Fund/SERV system, which links fund distributors to more than 15,000 funds. Delaware Investments was adament about its partners being on DCC&S. Some firms that were not on it previously decided to get on with this opportunity.

"Delaware is among the first investment managers to use the DCC&S as trustee and recordkeeper," says James DeRubertis, vice president, NSCC.

According to Barnaby, the firm modified its software so that it could operate seamlessly with the system. Delware Investments has its own trust company to fulfill the back-end functions for the product.

"This is only the start of our search for partners. However, we are not going to have an endless series of funds to offer our clients. I do not believe in fund supermarkets for 401(k) plans. I am interested in having good strong institutional funds that fulfill our style needs. I think if participants have too many funds from which to choose then they suffer from a paralysis," the official concluded.

The firm is currently marketing the SpectrumSolutions to consultants of mid-sized and large plans. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE