Multi-National Savings Plan Using Off-Shore Funds


Challenge:

In 2008, a Texas-based, multi-national Client asked BPG to create an investment portfolio using off-shore funds for the company’s defined contribution retirement plan for its international employees. The Client also wanted to include a well-engineered, diversified target date fund solution in the core lineup. Creating this portfolio proved to be particularly challenging given that the universe of off-shore investment options was much smaller than those available to U.S. investors.

Results:

BPG created a core investment lineup based on a discrete set of investment options that were distinct from a historical risk and returned perspective. The original core lineup included:

  1. Money Market
  2. Intermediate-term Bond
  3. Global Bond, Global Balanced
  4. US Large Blend
  5. US Small Blend
  6. Global Equity

Unfortunately, target date funds were not available in an off-shore format.  A series of asset allocation funds was available, but the return and risk of the option was sub-optimal.  As an alternative, Blue Prairie Group designed 5 custom asset allocation models that were a mix of the core investment options listed above.

In 2010, the Client asked BPG to review their asset allocation models and make recommendations.  BPG determined that good, off-the-shelf target date options were still not available for an offshore plan platform. In an effort to improve upon the custom target date models built earlier and provide a more robust array of core options to the plan, BPG partnered with the Client’s recordkeeper to determine whether additional asset classes could be added to the core investment lineup.

Upon a review of the fund categories available to the plan, Blue Prairie Group added the following investment options to the plan:

  1. US Large Cap Growth
  2. Emerging Markets Equity
  3. Real Estate

These above asset classes were then also included in a newly reconstituted set of custom target date options presented to the Client.

Background:

Working with a Bermuda-based TPA and an off-shore investment platform, BPG designed the investment portfolio, selected the investment managers and created the custom target date models for the international employees of a multi-national, Texas-based Client.