Compared to other Americans, federal employees are in good shape for retirement, according to the head of an investment firm with a $4.6 trillion portfolio.

Larry Fink, chief executive officer of BlackRock, spoke at a meeting Monday of the Federal Retirement Thrift Investment Board, which administers the Thrift Savings Plan. BlackRock manages the $242 billion of federal employees’ retirement savings that are in the C, S, I and F funds.

“Mr. Fink started his remarks by saying, ‘None of this applies to our participants because with FERS, CSRS or the military — with its 20-year retirement system — we all have fairly good retirement systems and many of the issues facing others in the private sector don’t really apply to federal employees,” Kim Weaver, director of external affairs for the Federal Retirement Thrift Investment Board, told In Depth with Francis Rose.

The Board invited BlackRock representatives to explain their management of the four funds. It’s important that they track, rather than beat, their benchmarked indexes, Weaver said.

There is “an art and science” to how BlackRock manages the funds, she said.

“When you’re doing the S&P 500, BlackRock can own pretty much every fund in the S&P 500 in the proportion that it’s weighted in the index,” she said. “That’s relatively simple in the money-manager world. Where it gets a lot more difficult is in the small cap S Fund because there are such small stocks that they don’t trade very often. To buy all of the stocks would be fairly expensive and not really worth it.”

BlackRock uses sophisticated, proprietary models to buy stocks representative of each sector, she said.

So far this year, all four funds have hewed closely to their benchmarked indexes, but done slightly better. The F fund, which is the smallest in terms of dollars invested, has deviated the most from its index, Barclays U.S. Aggregate Bond Index, with a difference of 0.65 percent.

The Board manages the lifecycle funds, but depends on Mercer, its investment consultant, to review the asset allocations. Mercer concluded that the current allocations were appropriate and recommended no changes.

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