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The Changing Retirement Landscape
At age 62, “most” have only saved 30% of the money they need to sustain their remaining life expectancy. However, for most people, if they continue working and retire at 70, their 401(k) balance increases the value of the average 401(k) by 86% Source: Boston College’s Center for Retirement/Greenwich Associates Investment Landscape Has Changed Because real interest rates have fallen in... -
“What’s In My Target Date Fund?” Isn’t The Only Question That Needs To Be Asked About TDFs
Given the large amounts of money flowing into target date funds, more effort by plan sponsors and participants should be devoted to understanding the methodology that the managers of the funds are using to manage the “glide path” of the fund. The reason that TDFs are so popular is because of the belief that these are “set it and forget it” funds that the underlying managers are taking care... -
Using Managed Accounts as Qualified Default Investment Alternatives (QDIAs)
Target Date Funds have long dominated the 401(k) Qualified Default Investment Alternatives world, but that could begin to change as participant’s financial situations become too complex for simple TDFs, and as competition drives down the fees of managed accounts. Managed accounts, while charging higher fees, allow for the use of ETFs, broader asset class allocation, and can offer a more holistic option for participants, taking into account other investments,... -
Largest University Endowments Afford Their Schools Competitive Advantage
A recent article by CNBC economics reporter John W. Schoen provides an in-depth look into reasons behind the rising cost of higher education in the U.S. It’s a complicated issue, with many moving parts. The after-effects of the 2008 recession, expanding student services, required budgetary expansion in state budgets, such as pensions, healthcare and Medicaid, and other issues have forced schools to increase the student tuition costs. The improved... -
S&P 500 Has Not Corrected 10% in More Than 3 1/2 Years
The S&P 500 has gone more than 3½ years without experiencing a 10% correction, according to Bespoke Investment Group. It is now the second longest stretch without a 10% correction since 1929. The longest is seven years (10/90-10/97). On average, the S&P 500 experiences a 10% correction about every 18 months, according to S&P Capital IQ. Source: First Trust’s “Factoid of the Day”. -
Supreme Court Expands Fiduciary Responsibilities for Plan Sponsors
In a far-reaching unanimous ruling issued today, the Supreme Court ruled in favor of participants in employee retirement plans who sued claiming that the plan sponsors violated their fiduciary duty by including higher cost “retail class” funds instead of identical investments with lower cost “institutional shares” open only to institutional investors. The ruling (Tibble v. Edison International, 13-550) overturns a lower court’s ruling that was dismissed that the employee... -
Global ETF/ETP Assets Forecast to Surpass Hedge Funds During Second Quarter
According to ETFGI, global assets in ETFs/ETPs are expected to exceed those in hedge funds. At the end of the first quarter, ETFGI estimates that hedge funds contained just $13 billion less than ETFs/ETPs globally. In Q1 alone, ETFs/ETPs gained $US96 trillion, compared to just US$18 trillion for hedge funds. Reasons for this growth include an “expanding toolbox of index exposures to various markets and asset classes, including hedge... -
Insurers Warming Up To ETFs in Fixed Income and Alternatives Space
A recent article on ETF.com indicates that insurance companies are beginning to consider ETFs, especially for their fixed income allocations, which typically can make up a large portion of an insurer’s investment portfolio in their general account. Fixed income ETFs offer some advantages over individual bonds, primarily liquidity and lower spreads. ETFs also helps insurance companies reduce the number of holdings in their portfolio while replicating their existing bond... -
8 Myths of Collective Investment Trusts
BenefitsPro has published an article written by Marlene Satter covering the 8 Myths of Collective Investment Trusts (CITs). The 8 myths are: Myth 1: CITs are exactly like mutual funds. Myth 2: CITs have a lower level of regulatory oversight than mutual funds. Myth 3: Undocumented CITs lead to uninformed decisions. Myth 4: High account minimums put them out of reach for all but large plan sponsors. (Most CITs,... -
Excessive Fee Lawsuit To Affect Retirement Plans
The ongoing litigation in Tibble vs. Edison reached the Supreme Court recently in a dispute over the high cost of retail mutual fund share classes in 401(k) plan when lower cost institutional share classes were available. The defendants argue that the statute of limitations alleging the fiduciary breach had expired. The case serves as a reminder that Plan fiduciaries should review plan investments each year to see if there...