Larger plans were much more likely to allow investment managers to engage in soft dollar transactions.
While two-thirds of the plans with more than $1 billion in assets acknowledged the practice, this was not so for less than a quarter of plans under $200 million.
Significantly, over half of the plans with less than $10 million and nearly a third of those with less than $50 million in plan assets did not know if the practice occurred.
Soft dollar transactions occur when an investment manager gets products or services other than trade processing from a broker-dealer in exchange for the manager’s directing of trades to the broker-dealer (for more see the Soft Dollar Solution Topic ).
Plan size was also a factor in compliance with performance reporting standards established by the Association for Investment Management and Research (AIMR).
Roughly half of those plans with less than $50 million in assets said they did not know if their investment managers were in compliance with those standards, though 20% said they were.
Over 80% of those with more than a billion in plan assets said their managers were in compliance with the standards, as did more than half (53%) of plans with $50 million to $1 billion in plan assets.
While such oversight might seem less critical to smaller, and potentially less “exotic”, portfolios, lack of staff might be contributing to the knowledge shortfall.
Smaller plans tended to make do with fewer staff dedicated to the plan, with 80% of plans with less than $200 million in assets dedicating less than five people to the plan. However, nearly 40% of the plans with $1-$9 billion in assets were similarly staffed, as were 60% of the plans with $200 million to $500 million in assets.
All of the plans with more than $10 billion in assets had at least 20 staff members dedicated.
While overall 35% of survey respondents said they had an independent risk management function, smaller plans were actually more likely to have embraced the function than larger programs.
Specifically, while 38% of those plans with less than $200 million in assets had the function, just 25% of those with $200-500 million made the claim. Only 21% of plans with more than $1 billion in assets acknowledged the function.
On the other hand, larger plans were more likely to have a pension board. While 90% of plans with more than $200 million in assets had one, only about three quarters of plans with less than $50 million did.
Nearly all plans, regardless of size, had a written statement of investment principles. However, nearly a third (30%) hadn’t reviewed or modified it in the past 12 months.
– Nevin Adams firstname.lastname@example.org