Investing

Despite something of a tepid second quarter, pension plans have enjoyed a strong year of growth.

Forty percent say information about fund fees is “very important” when selecting a mutual fund, ICI found in a survey.

A Willis Towers Watson report suggests large capital flows into certain squeezed portions of the private credit market are creating downward pressure on returns and upward pressure on risk.

GAO says in other cases where plans may face complexity, such as selecting a target-date fund or monitoring pension consultants, the DOL has provided general information, including items to consider and questions to ask. It suggests that the DOL do the same with ESG investing.

SSGA is following the trend of providers lowering investment fees, and sees an opportunity to attract 403(b) plan sponsors.

Institutional assets tracked by Wilshire Trust Universe Comparison Service (Wilshire TUCS) posted an all-plan median return of 0.88% for second quarter.

Alternative investments charge higher fees than traditional asset classes such as public equities and fixed income, and according to a study, these fees, in particular, may play a meaningful role in public plan underperformance.

“A cap-weighted strategy skews its way toward the largest stocks, but if plan sponsors own equities in a much more balanced way, it will help with stability,” says Bryan Belton, director, multi asset, at PanAgora Asset Management.

Corporate DB plans have experience funded status improvement, and LDI strategies help plan sponsors preserve this; however, investment committees are looking for new asset classes that can provide greater returns at a reasonable level of risk.

Although smart beta is still a small category with just $430 billion in AUM, or 0.5% of the global total, it has grown by 30% a year since 2012, according to Boston Consulting Group.

One reason DC plans are outpacing DB plans in terms of ESG adoption has to do with a difference in pressing priorities, rather than doubts among DB plans of the viability or usefulness of ESG.

Morningstar warns that the distinction between "active" and "passive" target-date series has become more muddled in recent years.

As more marketable obligations—such as those for in-pay retirees—are transferred to insurers, residual DB plans will have unusual and idiosyncratic features that make them more difficult to manage, which will drive pension investing to a “hibernation” focus for many, Mercer says.

An institutional investment approach uses outcome-oriented investments, broad asset class diversification, best-of-breed investment management, a thoughtful mix of active and passive strategies and are vehicle agnostic, a report notes.

While not a new concept, materiality is essential to efficiently integrating ESG factors into the investment process; it all boils down to being able to determine which ESG factors are likely to be linked to stronger investment performance by identifying risks that are related to certain industries.

There are a number of investment vehicles to consider when drafting a plan menu that best suits the plan's participants.

The expense ratios 401(k) plan participants incur for investing in mutual funds have declined substantially since 2000, Investment Company Institute data shows.

Panelists discussed recent trends with asset allocation vehicles, and how plan sponsors can help participants comprehend what it all means.

How Hearst Corp. followed a prudent process to choose its qualified default investment alternative.

Many people are unaware of their triple tax advantages, that balances can be carried forward and that the money can be invested.