A focus on adding more diversification to defined contribution target-date portfolios and other DC plan OCIO portfolios also led WTW Investment Services, New York, “to begin to build a multiasset fund with a broader range of real asset strategies beyond real estate investment trusts, including alternative credit and infrastructure,” said Jonathan Pliner, senior director of investments and U.S. head of delegated portfolio management, in an interview.
The WTW team also will focus on investment beyond retail real estate properties to include senior, student and single-family housing, life sciences properties and essential data infrastructure in the fund, he said.
Another innovation for the OCIO team is the development of partnerships with individual money managers to create customized strategies for WTW, Mr. Pliner said.
“When we’re looking at strategies we’re interested in, increasingly, we’re partnering with money managers to be sure that we get the specific exposure we want” in various asset classes, he said.
WTW Investment Services held the sixth position in P&I‘s ranking of OCIO managers by worldwide institutional assets under management with full/partial discretion, with AUM of $181.1 billion as of March 31, an increase of 7.9% from the prior year.
Boston-based State Street Global Advisors is increasingly bringing together public and private market strategies to its mostly customized defined contribution plan target-date OCIO practice, said Daniel Farley, chief investment officer of the investment solutions group, in an interview. He declined to provide specifics.
He noted that like BlackRock, SSGA now also offers both a deferred annuity and an immediate fixed index annuity in OCIO target-date defined contribution plans.
SSGA managed $181.7 billion as of March 31, up 0.3% from a year earlier and the fifth largest OCIO manager ranked by worldwide institutional assets.
Sources said there has been somewhat less innovation in OCIO portfolio investments for corporate defined benefit plans because many are using liability-driven approaches.
Mr. Farley said the firm’s OCIO team crafted active strategic allocation overlays for some corporate DB plans using LDI, which were “very important” because they underweighted equity and fixed-income allocations, added hedge funds for diversification and commodities and infrastructure for returns over the past six to seven months.
Other OCIO managers also are seeing interest from corporate defined benefit plan sponsors seeking OCIO LDI arrangements.
“We’re seeing very strong demand from corporate defined benefit plans on the LDI track that continue to move from open to closed to frozen,” said Peter Corippo, managing director for retirement fiduciary solutions for Russell Investments, Seattle, in an interview.
Because there is an increased need for corporate DB plans for better governance, strong staffing levels and additional technology to track funded status, Mr. Corippo predicts that more corporate defined benefit plans will move to an OCIO solution.
Russell Investments managed $175.9 billion in worldwide institutional AUM with full/partial discretion as of March 31, down 4.3% from a year earlier.