AIG Valic, a provider of retirement plan services to for-profit and nonprofit education, health-care, and government organizations, announced Thursday the completion of 18 fund substitutions in Variable Annuity Life Insurance Co.'s Portfolio Director fixed and variable annuity.
The project was begun more than two years ago with a review of fund options, including their performance, expenses, asset-class coverage, and management structure. The Houston-based company decided that fund expenses would be significantly reduced and fund selection and monitoring would be more efficient if subadvised funds replaced most of the public funds.
The substitutions caused the elimination of several funds, as well as the cloning of many of the public funds. Valic, a unit of American International Group Inc., is the adviser to the cloned funds, and the investment managers of the public funds act as subadvisers to the cloned funds. In one instance, the expense for a public fund was 1.39%, compared with 0.85% for its clone.
The transfer of assets from public to subadvised funds involved more than $4.5 billion and almost one million fund exchanges. It was completed during the Memorial Day weekend without any black-out period for participants.
