The $244 billion Thrift Savings Plan, the largest defined contribution plan in the world, faces an enormous operational challenge this year as it moves from an opt-in to an opt-out default for US federal employees. Amanda White spoke with executive director Greg Long about the fund's plans for 2010, which include a substantial investment tender.
The Thrift Savings Plan (TSP) will tender its entire outsourced assets under management later this year.
While for some funds this would mean a dramatic overhaul of providers and asset allocation, the structure of this fund is such that the tender process requires only five simple mandates. But this simplicity does not undermine the enormity of the assets up for grabs.
The TSP has five core individual funds and five lifecycle funds composed of percentages of the five individual funds. All are passively managed, and currently all are mandated with BlackRock.
In fact since the fund was designed, in 1986, it has employed Barclays in its various guises as far back as its Wells Fargo incarnation, and now invests in four of Barclays index funds.
The five individual funds are the G fund, made up of government securities which is the only fund not invested in a Barclays index fund; the F fund, the fixed income index fund; the C fund, the common stock index fund; the S fund, the small capitalisation stock index fund; and the I fund, the international stock index fund.
The TSP will initiate a tender for the four outsourced individual funds later this year, while the G fund will remain managed in house.
Executive director of the Federal Retirement Thrift Investment Board (FRTIB) the federal agency that administers the TSP, Greg Long, says this will be a competitive bid and could result in four different providers.
F-Fund JP Morgan or Merril Lynch/BlackRock
C-Fund Goldman Sach, Morgan Stanley or Merrill Lynch/BlackRock
S-Fund Same as above
I-Fund USB, Barcleys, GS, or Suisse