The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:A Sixty Bps Shortfall Costs $1 Billion Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, October 6, 2004

A Sixty Bps Shortfall Costs $1 Billion

by: Sean Hanna, Editor in Chief

Is the momentum in the fund industry shifting? The reason to ask was provided by the Massachusetts pension fund. Not only has the giant defined benefit plan rehired Putnam Investments just a year after it fired the Boston money manager, it has also dumped the advisor to American Funds from its roster of managers.

Los Angeles-based Capital Guardian Trust, a sister unit of Capital Research & Management, lost the $950 million mandate for the Massachusetts' plan due to poor performance, according to the L.A. Times.

Michael Travaglini, executive director of Massachusetts' Pension Reserves Investment Management Board (PRIM), called the removal of Capital Guardian "one of the most difficult decisions we've been confronted with in a while." He added that the fund added "an incredible amount of value" before adding that "our board had a loss of confidence in Capital's ability to replicate that success going forward."

Travaglini explained that Capital Guardian lagged its benchmark foreign indexes for more than three years and returned just 3.3 percent annually for the past three yeras (before fees) compared to the 3.9 percent annualized return of Morgan Stanley's EAFE.

The Massachusetts PRIM plan is influential with other public plan sponsors. It decision both to rehire Putnam and to let go Capital Guardian may signal a shift in the prevailing winds in the DB mandates game.

For the past year many plan sponsors have kept Putnam in the penalty box, either not adding the Boston manager's products or firing them from existing mandates. Meanwhile, Capital Research's American Funds have been one of the hottest products on the market.

At least for international mandates, that may be changing. 

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

 Do You Recommend This Story?

Return to Top
 News Archives
2024: Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use