OppenheimerFunds is back in the retirement game, but not with target date funds.
The asset manager hopes to make waves in the 401(k) space with Class I mutual fund offerings, a slate of 21 funds that run the gamut from developing markets (ODVIX) to international bonds (OIBIX) to a commodity strategy total return fund (GLVIX). Investors need a minimum of $5 million in assets to participate.
In light of the fee disclosure requirements imposed this year, the firm hopes to attract the eye of employers, plan consultants and advisers with low costs, stripping out 12(b)-1 and shareholder-servicing fees and instead charging a management fee plus administrative expenses of 3 to 6 basis points.
“The goal is to add a little more choice and flexibility when dealing with fee disclosure,” said Kathleen Beichert, senior vice president for retirement marketing at OppenheimerFunds. “Plans are interested in minimizing expenses and there is a call for transparency.”
A number of the funds offered in the I share class have garnered 4- and 5-star ratings from Morningstar, including Oppenheimer Developing Markets I (ODVIX) and Global Opportunities (OGIIX).
“Their best funds are in the global team; that’s their strength,” said David Kathman, senior mutual fund analyst at Morningstar Inc.
OppenheimerFunds brought in Krishna Memani in 2009 to oversee the Core Bond fund and three-year returns reflect the change in leadership. The fund, which is also part of the I-share lineup (OPBIX), returned 9.85% while its benchmark, the
Barclays U.S. Aggregate Bond Index, rose 6.24%.
Still, the five-year record, a loss of 1.97% versus the benchmark’s 6.59% gain, reflects the fund’s hard times, Mr. Kathman noted.
Getting into plan advisers' good graces could be a challenge.
Many remember the tumult that rocked a number of Section 529 savings plans that featured the Oppenheimer Core Bond Fund in 2008. The fund was listed as a conservative option, but ended up suffering a 36% loss that year, while its peers, on average, lost about 4%. A high-yield offering, Oppenheimer's Champion Income Fund, experienced a nearly 80% decline in 2008, compared with its peers' average loss of 26%.
OppenheimerFunds reached a $35 million settlement with the Securities and Exchange Commission in June after the regulator charged the firm with using derivatives to add to the funds' exposure to commercial-mortgage-backed securities. The SEC alleged that OppenheimerFunds made misleading statements about the funds as they struggled in 2008. The firm paid the penalty without admitting or denying the regulators' findings.
Further, OppenheimerFunds closed its target date fund series earlier this year, as have a handful of other providers, including
Goldman Sachs Asset Management and Columbia Management Investment Advisers LLC. At OppenheimerFunds, closing the target date series was part of the firm's reorganization of its retirement programs, an effort begun in late 2011.
Though the firm has bulked up its marketing capabilities with a dozen retirement wholesalers, six internal wholesalers and two managers, industry observers say it'll take strong performance to win back consultants and advisers.
“It's going to take time, and the key is putting up strong numbers. Numbers have a way of overcoming reticence,” said Geoff Bobroff, president of Bobroff Consulting Inc. “To the extent that they're middle-of-the-pack in performance, they'll be dismissed. There are too many good options.”
