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F&C Asset Management

From Wikipedia, the free encyclopedia

F&C Asset Management Plc
BMO Asset Management (Holdings) Plc
Columbia Threadneedle AM (Holdings) Plc
TypeA wholly owned subsidiary of Columbia Threadneedle Investments
IndustryInvestment management
Founded1972; 52 years ago (1972)
HeadquartersLondon, England, UK

F&C Asset Management Plc was an international asset management company. It was acquired by Bank of Montreal in 2014, and renamed as BMO Asset Management (Holdings) Plc in 2018. Its head office was in the City of London in Exchange House, Primrose Street, London. The company was then acquired by Columbia Threadneedle Investments in 2021 and renamed to Columbia Threadneedle AM (Holdings) Plc in 2022.[1]

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Transcription

Hello everyone, Dieter Scherer here from RealizeYourRetirement.com. Today we are going to go through an overview of the funds in the Federal Thrift Savings Plan, better known as the TSP, that has been updated for 2014. We'll go through the different funds in the TSP, their characteristics, and the 10 year returns. So let's get started. There are five funds in the TSP. The C, S, I, F, and G funds. These allow investors to invest in the US large stocks, US small stocks, select developed global markets, and US debt. Now, the funds are trust funds, not mutual funds, and are not regulated by the SEC. As such, they cannot be tracked by Financial Reporting Software or in say, Yahoo or Google Finance. The management of the trust funds is outsourced to Blackrock Institutional Trust Company, which tracks the indexes specified in the fund documents. The expenses for the funds are very low, weighing in between 0.026% and 0.039%, which can also be referred to as 2.6 basis points to 3.9. This is about 26 to 39 cents for every thousand dollars you have invested. This is about half the annual cost of the lowest priced Vanguard ETFs. However, to keep those costs low the TSP must limit transaction costs, therefore you are limited to 2 interfund transfers per month, which means you can only change how your money is allocated between the funds twice per month. Now, if you've already used your 2 interfund transfers in a given month, you can always transfer money to the G fund, which is the government securities fund. Now let's look at each fund and see the characteristics of the fund's assets. The C Fund or Common Stock Fund tracks the S&P 500 index. Now the S&P 500 index is made up of 500 of the largest companies in the United States. Therefore this would be considered a large cap fund. Let's look at a few characteristics of the fund: The median sized company held in the fund, median meaning half of the companies are larger and half the companies are smaller than this number, is $17.1 billion. The smallest company in the fund is $3.1 billion. And the size of the largest company is $478 billion. As you can see the companies in the C fund are large, mature companies, which may be nearing market saturation for their goods. This means they may not grow as fast as they once did, when they were a small nimble company that was gobbling up market share. Therefore we've traditionally expected large companies to offer greater returns and risk than bonds, but lower, yet more consistent returns than their smaller stock brethren. If we look at the C fund's performance over the past 10 years, we see that it returned 7.44% per annum. Consequently, we'd categorize this as a "Growth" fund. The S Fund or Small Cap Fund tracks the Dow Jones US Completion Total Stock Market Index. This index includes all of the publicly traded companies in the United States that are not included in the S&P 500 index. Therefore the S fund includes both mid-cap and small-cap companies. The size of the largest company is $30.6 billion. The smallest company in the fund is less than $100 million. And the median sized company held in the fund, is $500 million. Mid and small sized company stocks also tend to be more volatile than large company stocks, which means that your investment in them is more likely to have larger fluctuations in the price. This risk is typically rewarded, as small company stocks have been noted to offer greater returns than more mature large company stocks, as you can see in their past 10 years of performance of 10.43%. Because of their risk and return characteristics I'd categorize this fund as an aggressive growth portion of your portfolio. categorize this fund as an aggressive growth portion of your portfolio. The I fund or International fund tracks the Morgan Stanley Capital International Europe Australasia Far East Index, which is more commonly called the MSCI EAFE International Index. Countries in the index include the UK, Japan, Germany, France, Australia, New Zealand, Hong Kong, and the remainder of the developed nations in Europe. If you look at the size of various stock markets around the world, the US would only amount to around 50% of the world' total market capitalization, with a bulk of the remainder falling into the developed nations contained within the EAFE. All of the other funds in the TSP are based on US equities or US sovereign and corporate debt. Thus, this is the sole holding in the TSP that allows you to diversify internationally. The S&P 500 in the United States may be host to the world's largest companies, but many of the companies in the I Fund are still quite large. The median sized company in the I fund is $6.4 billion dollars. The size of the smallest company is $678 mililon And the size of the largest company is $248 billion. Many of the companies in the I fund are large companies in developed nations, many of which are multinational corporations, therefore, in our interconnected global marketplace, they often experience similar growth patterns to large companies in the US. The performance of the I fund over the past 10 years amounts to 7.06%, which would be classified as a growth investment. The F Fund, or Fixed Income fund, tracks the Barclay's Capital Aggregate Bond Index. This index contains the majority of US investment grade, meaning high quality, bonds. These bonds range from US Treasury bonds and notes, to corporate bonds, and government agency bonds. In total, bonds the index have a duration of 5.09 years. Duration is simply a measurement that takes into account both the time before you are paid back your principal, which is known as the maturity, and the stream of income payments. To simplify this, I'll say a 10 year bond at current rates will have a duration slightly less than 10 years because you receive income payments between now and the maturity date in 10 years. Basically the higher the interest rate on a bond, the lower the duration and vice versa. Bonds with higher duration are more affected by changes in interest rates than bonds with shorter durations. The average duration of the bonds in the fund is 5.09 years 40% of the fund is invested in US Treasuries and government agency securities The fund invests in a total of 8,728 notes and bonds. The past 10 year performance of the fund is 4.65% Therefore this would be classified as Income and Preservation Finally, the G fund or Government Securities Fund, does not track an index. Instead the fund invests in special issue treasury securities that are not traded on the public market, therefore changes in interest rates do not affect the price of the securities in the fund. Changes in interest rates only change the amount newly issued securities in the fund pay out. It's also worth noting that if you do not change your default contribution allocation, any contributions you make to the TSP will be automatically allocated to the G Fund. Because the G Fund invests in non-marketable US Treasuries: It is very low risk It's also 100% government, no corporate debt is in the fund. Finally, because changes in the interest rate do not affect the price of the bond, earnings in this fund come solely from the income from the Treasuries in the fund, instead of both income and price changes. The 10 Year Performance of the G Fund is 3.39%. Which would categorize this fund to be used as a source of Preservation of capital in your portfolio. Here's a breakdown of the total assets of all government employees in the TSP. I just want to reiterate that this isn't a recommendation about how to allocate your account, it's a report of how the sum total assets in the TSP are split between the different funds. The L funds, which are lifecycle funds, are not included here because investments in L funds are actually invested in the underlying C, S, I, F and G funds, just in different amounts based on your expected date of retirement. As of the end of 2013 the TSP had a total of $397 billion in the plan. The C fund has $120.8 billion which is 30.4% of the TSP The S Fund has $46.6 billion which is 11.7% of the TSP The I fund has $33.3 billion which is 8.4% of the TSP. The F Fund has $23.6 billion, which is 5.9% of the TSP Finally the G fund has $172.7 billion, which is 43.5% of the TSP As I mentioned earlier the G fund is the default investment for government employees, so it looks like many employees have neglected to change their default allocation from the G fund. The second largest, the C fund, is likely a popular choice because large, well known US companies seem safer than other types of companies. That assumption really depends on the economic environment as different economic environment will cause different funds to become more or less risky. With the Fed pursuing higher interest rates in the next few years and an uncertain outlook for the US stock market, you should either retain the services of a financial advisor or educate yourself more on the situation so that you know the risks involved with each type of investment if you are a do-it-yourselfer. Look out for my future videos and blog posts on RealizeYourRetirement.com to receive more free educational materials about the TSP and better solutions for retirees. Click on the videos below to access videos related to TSP Lifecycle funds or the Advantages and Disadvantages for using the TSP for your retirement savings. Sign up for Retirement Planning Academy on RealizeYourRetirement.com to become more educated about Social Security maximization strategies, risk-controlled investing strategies, what you need to know before you purchase an annuity, how to properly diversify your investments, value investing strategies, and exclusive financial tools and calculators. Thank you for watching and have a great day!

History

F&C Asset Management was established in 1972, to take over the management of the Foreign & Colonial Investment Trust.[2] HypoVereinsbank took a 50% stake in the company in 1989, increasing it to 90% in 1998. Eureko acquired HypoVereinsbank's stake in 2000[3] and acquired the remaining 10% (which had been held by Foreign & Colonial Investment Trust) in 2001.[4]

F&C Asset Management retained the F&C brand for the enlarged business when it merged with Isis Asset Management in 2004.[5] The enlarged business was then owned jointly by Eureko and Friends Provident (which had been the majority shareholder in Isis) although, after F&C Asset Management listed on the London Stock Exchange, Eureko divested much of its holding in 2007,[6] and Friends Provident divested its holding in 2009.[7]

F&C Asset Management was the official sponsor of Birmingham City F.C. between 2007 and 2011.[8]

In 2014, F&C Asset Management was acquired by Bank of Montreal in deal worth £697 million,[9][10] and then rebranded as BMO Global Asset Management.[11] In 2021, BMO GAM (EMEA) became part of Columbia Threadneedle Investments, including the management of the F&C Investment Trust, and re-rebranded as Columbia Threadneedle AM (Holdings) Plc.[12]

References

  1. ^ Filing History, Companies House
  2. ^ Human, Tim (January 25, 2011). "F&C Asset Management Renews Attack On Activist". Business Insider. Retrieved 18 February 2023.
  3. ^ "Foreign & Colonial bought by Eureko for £417m". The Telegraph. 23 December 2000. Retrieved 18 February 2023.
  4. ^ "Eureko to Float Fund Manager, Plans IPO of Its Own Shares". Wall Street Journal. 30 January 2004. Retrieved 18 February 2023.
  5. ^ "Isis and F&C join forces in £378 million deal". City Wire. 2 July 2004. Retrieved 18 February 2023.
  6. ^ "F&C shares dive as investor bales out". The Times. 17 May 2007. Retrieved 18 February 2023.
  7. ^ "Friends offers investors one for 10 deal on F&C demerger". The Guardian. 31 May 2009. Retrieved 18 February 2023.
  8. ^ "F&C in sponsorship deal with Birmingham FC". Money Marketing. 31 May 2007. Retrieved 18 February 2023.
  9. ^ Wilkes, Tommy (27 January 2014). "Canada's BMO offers $1.2 billion for F&C Asset Management". Reuters. Retrieved 18 February 2023.
  10. ^ Ben Dummett (28 January 2014). "Bank of Montreal to Buy F&C Asset Management". The Wall Street Journal. Retrieved 18 February 2023.
  11. ^ Beth Brearley (11 June 2015). "F&C to rebrand as BMO Global Asset Management". Money Marketing. Retrieved 18 February 2023.
  12. ^ Columbia Threadneedle completes rebrand of BMO Gam investment trusts, Portfolio Adviser, July 2022.

Further reading

  • F&C – A History of Foreign & Colonial Investment Trust by Neil McKendrick and John Newlands, 1999.
This page was last edited on 10 June 2023, at 14:44
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