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Black Knight
Asset Management Profile
With the collapse
of the US
and international equities market, more DC assets than
ever have flowed into stable value and fixed income
funds.
When markets were booming,
everyone thought that stable value was a commodity and
that all that was needed was to negotiate returns and
fees without due diligence on the stable value manager.
Black Knight Asset Management
is an independent money manager with over 75 years
experience in the stable value world and one that
advisors should take a careful look at as they review
and select this very important investment option for
their DC plans.
The principals of
Black Knight come out of the ICMA retirement group which
is the dominant manager of pensions for 457 and
government plans.
That group, which managed
ICMA’s “Plus Fund”, doubled assets from 2001-2007 under
their direction and went from dead last to number three
in the main industry tracking standard.
Founded in March, 2007,
Black Knight showed impressive performance, which they
ported over from the ICMA Plus Fund, and have begun
gaining traction on platforms and are just starting to
see significant asset flow.
Currently available through
third party trading partners like Schwab, Fidelity, STN
Reliance and Matrix, independent record keepers without
a proprietary sable value funds like Ascensus and CPI
make Black Knight available to advisors.
Lured by potentially larger
returns, the mostly hidden toxic assets found in many
proprietary stable value and fixed income funds resulted
in disaster and potential insolvency of epic proportions
for some funds.
With a 5.33% return in 2008,
Black Knight stayed away from difficulties by avoiding
synthetics and more risky investments.
As a small firm, Black
Knight enjoys more flexibility and alacrity depending
largely on their own research and has developed a
repeatable and sustainable process that even larger
firms would envy.
More than ever, advisors need to push their record
keepers to make independent stable value and fixed
income funds available as their plans and participants
gravitate to these safer, wealth preservation types of
investments just as they had pressed for greater choice
with equity funds.
Similarly, the stable value sub-advisors of
target date funds need to be carefully reviewed.
It is too important a decision to allow a record
keeper to push proprietary stable value to subsidize the
cost of the plan or prop up profits.
As more sponsors hold advisors responsible for
outcomes, Black Knight is an example of an alternative
stable value fund that good advisors focused on the
welfare of their clients should look at carefully.
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