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Nvest Offers Unusual Pension Plan Analysis


Nvest has begun providing its defined contribution wholesale customers with quarterly updates of fund holdings and returns for its 15 affiliates, data which up until now has not been available to plan sponsors, according to the company.

Until now, most fund companies have provided plan sponsors with only annual performance information, said Doug DuMond, senior vice president with Nvest Retirement Services' retail marketing division. Nvest, a mutual fund holding company, has $136 billion under management.

Nvest's holdings-based analysis provides details of a portfolio's diversification by industry sector and lists its top ten equity holdings by company name. This information is not customarily made available to plan sponsors even on an annual basis, said DuMond.

"This tells investors exactly where the fund's investments have been placed, much like a list of ingredients," said DuMond.

The holdings based analysis, in the form of a pamphlet, also evaluates returns in relation to risk. For example, Nvest's analysis compares a fund to the S&P 500 and in relation to a number of factors including size, price to earnings ratios, price to book ratios and the degree to which holdings consistently beat earnings estimates. Nvest also provides information on how exposed a portfolio is to yield curve movements.

Nvest further provides analysis of the source of a manager's good or bad returns. The analysis indicates whether the returns are due to his individual investing style, industry allocations or stock selection.

Patrick Rudden, managing director of BARRA RogersCasey, of Darien, Conn., a pension plan consultant, says data on defined contribution plans has been rudimentary - until now.

"But on the defined benefits institutional plan sponsor side, particularly for domestic equity portfolios," a high level of analysis is expected because these decisions are normally made by a firm's treasury department, Rudden says. "What is new with Nvest is that they are making these same sophisticated tools available to defined contribution plan sponsors, often overseen by the human resource department. I just don't know of any other mutual fund company providing this kind of analysis to the defined contribution market." BARRA RogersCasey does the analysis Nvest provides plan sponsors.

Edmund Martinez, director of investments with Merrill Lynch Group Employee Services, Plainsboro, N.J., says Merrill Lynch has already amassed its own "supermarket" of mutual funds. However, Merrill is currently looking into expanding its offerings with some of Nvest's mutual funds - particularly because of the in-depth data that accompanies them.

"You typically have to rely on performance-based analysis, because you don't have access to assets in transaction," Martinez says. "At least with the Nvest data, I can achieve some high-level analysis and pass that along to our plan sponsors, so they, in turn, can identify the right risk and performance characteristics for their customers.

"You can get too comfortable without looking under the hood," Martinez said.

Betsy Morrissey, manager of John Hancock Retirement Services product management in Boston, uses Nvest's data to better equip her staff of nine retirement wholesalers.

"I do get a lot of industry information, and I'm as capable as anybody else to pull up my Morningstar and Lipper reports. But this is very specific to each fund, and that is unique," says Morrissey.

"The more information you can provide plan providers, the better educated employees will be," said Morrissey. "And that means they'll be more comfortable with investing and will save more for their retirement."