ABSTRACT
A completeness fund is one of those simple ideas that seem to get complicated very quickly. Here is the simple part: As a plan sponsor, you choose a broad market index, such as the S&P 500 or Russell 3000, as the benchmark for the domestic equity component of your total plan. You then select a number of equity managers with specific sty les who also have specific style benchmarks. When you aggregate all of the managers' benchmarks, they may not add up to your broad market benchmark. You therefore have a hole that represents a"style bet." A completeness fund, which is usually a passive portfolio, is constructed to offset that style bet and get the style of your total equity fund as close as possible to the style of your market benchmark. Now your total fund should track the broad market benchmark very closely, and, as long as the individual managers in the aggregate beat their respective benchmarks, your fund will beat the market.
