Blog

Use of Liquid Alts Growing in Self-Directed IRAs

A recent article at WealthManagement.com discussed that interest in self-directed IRAs is growing.  A few reasons for this are that more people have begun to accumulate sizeable assets in their retirement plans. and are looking to diversify their portfolios beyond stocks, bonds and mutual funds.  As such, there tends to be a greater appetite for alternative assets such as real estate, precious metals, commodities, limited liability corporations and hedge funds. A...

Why have some target date funds recently increased their equity allocation?

Blackrock, Fidelity and Pacific Investment Management Co have increased their equity allocation within their target date funds in the past year.  These shifts have consultants, advisors and analysts questioning not only the reasons behind the move, but the potential consequences, especially if the recent market correction would expand.  A few excerpts: “The shared characteristic these funds have is they have not been doing so well since 2008. The question is...

Citigroup 401(k) Plan participants suit allowed to move forward

Suit alleges plan fiduciaries violated ERISA by offering affiliated funds that charged higher fees. A U.S. District Court judge in New York is allowing a participant lawsuit against plan fiduciaries of the Citigroup 401(k) plan. The case is another instance of an affiliated product that charges higher fees than funds with comparable performance.  A copy of the article, titled “Court Moves Forward Citigroup 401(k) Excessive Fee Suit” appeared on PlanAdvisor...

Business Owners and Plan Sponsors: You need to be more engaged in your Plan (its the law)

Business owners and plan sponsors:  When it comes to the 401(k) retirement plan that you’ve established for your company, you need to know one thing: You (the fiduciary or plan sponsor) are working for the employees and their beneficiaries. Your main focus is them, not the company. Therefore, you want to make sure that you are paying reasonable costs for the plan, you need to make sure the...

5 Ways Participants Can Make Their Lousy 401(k) Plan Better

A recent article titled “5 ways to make your lousy 401(k) plan stellar” suggests actions that a 401(k) plan participant might take to improve if they are in a less-than-desirable 401(k) plan.  In summary, the five options are: 1. Self-directed accounts. While not offered by all plans, some of them do, and it lets you range outside the fixed menu of investment options.  Tread carefully here though. As the Dalbar studies show, most “go-it-alone”...

The Value Add of Smart Beta

ETF Model SolutionTMs incorporates fundamental indexing (smart beta) strategies in our models where appropriate, including our Endowment Collective Fund, as we see potential to add value and enhance our risk-adjusted returns.  The two founders of AQR Capital Management recently wrote piece about smart beta in which they categorize each of the types of approaches and describe how they each may be incorporated into a broad portfolio. The article provides an overview covering the concepts...

Endowment Index^TM Asset Allocation and 10 Year Returns Compared to the Nation’s Largest Pension Fund

The nation’s largest pension fund, the California Public Employees Retirement System, better known as CalPERS has been in the news this week with an announcement that they are going to be liquidating their $4B hedge fund allocation over the next year.  Apparently, the high costs and complexities, combined with their ability to scale the asset class relative to their $300B portfolio just isn’t worth the effort. While on the surface this...

DC Plans Can Benefit by Adopting DB Plan Best Practices

A presentation by Robert C. Merton at Plan Sponsor Council of America’s 2014 National Conference highlighted several best practices used by defined benefit plans that could be adopted by defined contribution plans to help improve plan outcomes.  The two areas of focus were on communication with participants and on investment selection.    For example, since DB plans promise a benefit, their managers seek to invest to achieve that goal....

Investment News Webcast “Demystifies” Liquid Alts for Advisors

In a webcast presented by Investment News, Consuelo Mack interviewed Robert Jenkins, Managing Director/Global Head of Research for Lipper, Dr. Hossein Kazemi, Ph.D., CFA Senior Adviser to the CAIA Association’s Program, and Dennis Bowden Managing Director U.S. Research & Advisory at Strategic Insight.  The interview discussion centers around understanding and differentiating different types of alternative strategies and how they can best address a client’s needs. The webcast content also includes information on how to construct a well-diversified portfolio using liquid alternatives...

A Better Option Than Target Date Funds

An article titled “A Better Option Than Target-Date Funds” written by Prateek Mehrotra, CIO of ETF Model SoTMlutions and Endowment Wealth ManagementTM was recently published in the Industry Voices column on PlanSponsor.com. In the article, Prateek discusses the following drawbacks of TDFs: TDFs assume a “one-size fits all” and fail to take into account unique risk profiles and investment objectives of participants TDFs mechanical shift to conservative assets in...