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News & Policy

PBGC Selects Equity Investment Managers

April 02, 1998

The Pension Benefit Guaranty Corporation (PBGC) has selected three investment management firms to manage a total of about $1.5 billion in equity assets. Ark Asset Management, New York, Brinson Partners, Chicago, and Pacific Investment Management Company (PIMCO), Newport Beach, Calif., were selected to manage active large capitalization equity portfolios.

"As PBGC's assets have increased with strong investment earnings, we expanded our roster of equity managers for continued investment growth," said N. Anthony Calhoun, Deputy Executive Director and Chief Financial Officer of PBGC.

Each firm was awarded a one-year contract that is renewable annually for seven years. Funding for each firm will occur over the next six months. Ark will manage $700 million, Brinson $550 million, and PIMCO $225 million.

In a competitive search for equity managers, PBGC evaluated firms with at least $3 billion under management and a five-year performance history in excess of the S&P 500. With these selections, PBGC now employs 12 asset management firms.

At the end of fiscal year 1997, PBGC's total investments were valued at $15.6 billion, including $9 billion in fixed-income securities and $6.6 billion in equities. For the period, PBGC's investable assets increased by $3.4 billion, largely due to investment earnings.

PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers about 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.

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PBGC No. 98-19