New analysis of the country’s largest private-sector pensionsshows sponsors’ investment strategies are diverging like neverbefore.

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Russell Investments has published a new review of howpension assets are managed among the20 sponsors in the “$20 billion” club, a group coined by Russell in2011 in an effort to track trends among the largestpensions.

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Bob Collie, chief research strategist at Russell, writes thatwhile uniformity in investment strategy persists amongindividual retirement savers, non-profits and public pensions, thelargest defined benefit sponsors are showing signs of moreindividualized approaches.

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Much of the new trend is explained by the divergence in returnseeking and liability-driven strategies, says Collie.

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He compares Ford Motor Co.’s U.S. pension plans, which have 77percent of assets invested in fixed income, and just 7 percentinvested in equity, with Johnson and Johnson’s worldwide plans,which are invested 79 percent in equities, and just 21 percent infixed income.

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Equity strategies are also less uniform than previouslyobserved. UPS’s U.S. plan has over half of its equity allocationinvested in international holdings, while Honeywell’s U.S. planholds 76 percent of its equity portfolio in domesticcompanies.

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Further difference is realized with respect to real assets andalternative investments. Dow Chemical, Northrop Grumman and Verizoneach have 10 percent of their portfolios invested in real estateassets, while Exxon Mobile does not have a committed real estateallocation.

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And Verizon has 19 percent of its pension portfolio invested inprivate equity, compared to Federal Express, which only holds 1percent of assets in private equity.

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Five of the top 20 pensions show no interest in hedge funds,while 12 percent of UPS’s assets are invested in hedgefunds.

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“Investment decisions are clearly being driven by factors otherthan a desire to track the broader peer group behavior, and thathas to be a good thing,” writes Collie.

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The 20 largest pension sponsors collectively hold $914 billion in futureobligations, according to recent data fromRussell.

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By the end of 2015, the club’s total funding deficit was $182 billion, aslight improvement over the $194 billion charted at the beginningof 2015. An increase in the average discount rate, which is used toprice future liabilities, from 4 percent to 4.4. percent, explainedmuch of the improvement.

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Together, club members held $732 billion in assets at the end oflast year. Investment returns for the year were a paltry $8.3billion, or 1 percent, well below sponsors’ interest rate liabilityon future obligations.

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Last year, the $20 billion club paid $49 billion in pensionassets to beneficiaries.

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At the end of 2010, only one member had as much as 45 percent ofassets invested in fixed income. By the end of 2015, six had asmuch allocated to fixed income, with three sponsors—Exxon, Ford andGM—having at least 55 percent of their portfolios in fixed income,according to Russell’s review of the companies’ 10K filings withthe Securities and Exchange Commission.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.