Investment consultant urges diversification; board receives report

Jason Pulos, an investment consultant with ACG, told the Oklahoma City Deferred Compensation Board on May 21 that recent market volatility underscores the importance of offering diversified options for participants and maintaining qualified default options.

"As fiduciaries for a defined contribution plan or participant directed plan, your objective is to make sure that there are a diversified set of options for the participants to build, their own asset allocation," Pulos said. He highlighted decade-long return differences across asset classes — noting a 10-year U.S. large-cap return of about 12.3% versus roughly 6.3% for U.S. small cap — and said those differences help explain why participants concentrate assets in top-performing funds.

Pulos reviewed the plan lineup the board adopted during the transition: a mix of active and passive equity options, small- and large-cap growth and value funds, non-U.S. equity options, two fixed income funds (JPMorgan core bond and a Pioneer multi-sector option), real assets, a balanced fund and target-retirement funds that serve as the qualified default option. He noted a substantial concentration of assets in the Fidelity Contrafund and reported about $1.5 million in self-directed brokerage assets across 12 participants.

Pulos said ACG has been monitoring fund managers for style drift, team turnover and other qualitative risks and reported no current concerns. "But at this point, no no issues with with any of the funds in the lineup," he said, adding that ACG will return to the board with recommendations if it identifies material concerns.

After the presentation the board moved to accept the report. The meeting record shows a motion to receive the consultant report was made and the board voted to receive it; mover, second and vote tallies were not specified in the transcript.