Active Extension Strategies Gaining Interest From Plan Sponsors
New research from RiverSource Investments and PLANSPONSOR
MINNEAPOLIS (Business Wire EON) May 15, 2008 --
Active extension strategies, which are relatively new to institutional
investors, are already in use or are under consideration by more than
half of public defined contribution plans and one-third of corporate
plans, based on responses to a new research study. The research was
sponsored by RiverSource
Investments, LLC, a subsidiary of Ameriprise Financial, Inc., (NYSE:
AMP) and conducted by PLANSPONSOR magazine. The data validates
increasing interest in and knowledge about the strategies among both
public and corporate plans.
Survey results showed that public plan managers are generally more
knowledgeable about active extension strategies –
72 percent of respondents claim to be “somewhat”
or “extremely”
knowledgeable about active extension, compared to just 42 percent of
corporate plan managers. As a result, 51 percent of the public plans
responding are using, seriously considering, or evaluating active
extension strategies, versus 31.5 percent of corporate plans doing so.
“This survey provides further validation that
active extension strategies are becoming an integral component of
defined benefit plans,” said Chris Keating,
head of institutional sales and client services at RiverSource
Investments. “With only 14 percent of plans
citing that they think these techniques are just a passing trend and
nearly 41 percent of plans citing that they would allocate 5 to 30
percent of their portfolio to active extension, we view these strategies
as a real source of growth potential over the next few years.”
Among plans responding to the survey, standard deviation, beta and
tracking error are the most common risk benchmarks used. Also, results
show that short-selling track records are considered more important in
deciding whether to use a manager for active extension, and just 35
percent of plan managers think long-only investing skill and success can
translate to active extension strategy success.
Active extension strategies is the umbrella term for 130/30, 120/20 and
other such fund structures that allow enhancement of long mandates to
also hold short positions.
About the research
In March 2008, feedback was solicited from small, mid-, and large
defined contribution plan sponsors on their utilization of and
perceptions about active extension strategies.
A total of 119 firms participated in the study, which was conducted via
a web-based, anonymous questionnaire. The questionnaire, developed
jointly by RiverSource Investments and PLANSPONSOR, consisted of
21 questions.
RiverSource Investments provided financial support for this study and
its role was not disclosed to research participants. PLANSPONSOR is not
affiliated with RiverSource Investments and nothing herein should be
taken as an endorsement by PLANSPONSOR of RiverSource Investments’
products or services.
An article on the survey is available in the May issue of PLANSPONSOR.
Webcast
A webcast for institutional investors on the survey results is scheduled
for June 3 at 12 p.m. EDT featuring Laton Spahr, portfolio manager of
RiverSource 120/20 Contrarian Equity Fund. The webcast will be moderated
by Charles Ruffel, CEO of PLANSPONSOR.
About RiverSource Investments
RiverSource Investments develops and manages asset growth, preservation
and income solutions that revolve around the needs of today’s
investors. The firm’s specialized investment
platform provides access to investment and research professionals
located in strategic investment centers in the U.S. and overseas. As a
leading source of investment insight and innovation, RiverSource
Investments delivers a full range of solutions across the risk return
spectrum to retail investors and their advisors and to institutional
investors including corporations, pension funds, governments,
foundations and endowments.
RiverSource Investments, LLC is an SEC-registered investment adviser
that offers investment products and services under the names RiverSource
Institutional Advisors, RiverSource Alternative Investments, RiverSource
Capital Management and RiverSource Insurance Assets.
About Ameriprise Financial
Ameriprise Financial, Inc., is a diversified financial services company
serving the comprehensive financial planning needs of the mass affluent
and affluent.
For more information, visit ameriprise.com
You should consider the investment objectives, risks, charges and
expenses of a mutual fund carefully before investing. For a free
prospectus, which contains this and other important information about
the funds, call (888) 791-3380. Read the prospectus carefully before
investing.
Investment products, including shares of mutual funds, are not federally
or FDIC-insured, are not deposits or obligations of, or guaranteed by
any financial institution, and involve investment risks including
possible loss of principal and fluctuation in value.
RiverSource® mutual funds are distributed by
RiverSource Distributors, Inc., Member FINRA, and managed by RiverSource
Investments, LLC. These companies are part of Ameriprise Financial, Inc.
© 2008 Ameriprise Financial, Inc. All rights
reserved.
MULTIMEDIA GALLERY http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5686815
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