Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
December 2nd, 2015
Benefits & Administration
Managed Accounts More Appealing for 401(k)s
Target-date funds have, of course, been a boon to defined contribution plans, providing participants with assurance that someone more knowledgeable will monitor their holdings, periodically reweighting the stock-to-bond ratio as their retirement nears. Where the funds fall short, though, is that an investment strategy based on age alone, while better than no strategy, can’t produce the results of a customized one, says Steve Dorval, managing director of retirement and investment strategy at John Hancock Retirement. Technological advances in data collection and engagement make managed accounts more viable as the default strategy for 401(k)s, experts say.Read more >
Market volatility has made investors skittish, according to the 2015 Market Perceptions Study from Allianz Life Insurance Company of North America. Just over one-third, 34%, say they believe the market is “too volatile and too risky” for their investment style. Eighty-one percent would prefer a product with a guaranteed 4% return.Read more >
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2021 Plan Sponsor of the Year

2020 Recordkeeping Survey
Administration
How to Effectively Measure Retirement Plan Success
Demographic Shift a Challenge for Multiemployer Plans
Despite the financial volatility caused by the 2008 Great Recession, the majority of multiemployer defined benefit (DB) pension plans remain financially stable and have seen an increase in funding levels and overall assets, according to a report from the International Foundation of Employee Benefit Plans and Horizon Actuarial Services, LLC. But, while plans continue to gain financial stability, changing participant demographics threaten to derail this in the future.Read more >
Public Pensions Face Imminent Funding Challenges
According to Milliman’s fourth annual Public Pension Funding Study of the nation’s 100 largest public defined benefit (DB) plans, overall reported funded ratios increased from 70.7% to 75%. However, after years of strong asset performance, 2015 has been flat from an equity standpoint, and many public plan sponsors have reduced return assumptions going forward, a trend that reflects today’s market realities but also creates a steeper hill to climb if these pensions are to reach full funding, Milliman says.Read more >
Sponsored message from Russell Investments
Going passive is still an active decision
Are you meeting your fiduciary duty by offering a passive line-up to your DC plan participants? This paper provides an overview of several Items to consider when selecting and monitoring plan investments.Read more >
Products, Deals and People
Wells Fargo Expands Investment Solutions
Wells Fargo Institutional Retirement and Trust introduced a managed account service for 401(k) plans, and Wells Fargo Asset Management launched a suite of actively managed TDFs.Read more >
Economic Events

The U.S. Census Bureau of the Department of Commerce announced that construction spending during October was estimated at a seasonally adjusted annual rate of $1,107.4 billion, 1% above the revised September estimate of $1,096.6 billion. The October figure is 13% above the October 2014 estimate of $979.6 billion. During the first 10 months of this year, construction spending amounted to $888.1 billion, 10.7% above the $802.3 billion for the same period in 2014.

Market Mirror

Encouraging economic news from Japan and Europe pushed major U.S. stock indices higher Tuesday, according to the Associated Press. The Dow closed 168.43 points (0.95%) higher at 17,888.35, the NASDAQ increased 47.64 points (0.93%) to 5,156.31, and the S&P 500 climbed 22.12 points (1.06%) to 2,102.53. The Russell 2000 was up 6.05 points (0.50%) at 1,204.15, and the Wilshire 5000 gained 208.11 points (0.96%) to finish at 21,866.66.

On the NYSE, 3.2 billion shares traded, with a more than 2 to 1 lead for advancers. On the NASDAQ, 2.7 billion shares changed hands, with 1.3 advancing issues for every declining issue.

The price of the 10-year Treasury note increased 17/32, bringing its yield down to 2.148%. The price of the 30-year Treasury bond climbed 1 11/32, decreasing its yield to 2.904%.

Investing
Managed Accounts More Suitable for Some Participants
Recent research from Cerulli Associates takes a critical look at the use of managed accounts in the defined contribution (DC) market, now estimated at $5.2 trillion. As the DC market matures, Cerulli notes that the asset management industry continues to reassess and measure the efficacy of a target-date product as the primary retirement investment solution for most savers, according to “Retirement Markets 2015: Growth Opportunities in Maturing Markets.” Managed accounts will likely do better in DC plans if they are presented as a service instead of just another investment option, says Jessica Sclafani, associate director at Cerulli. These accounts should complement target-date funds (TDFs), she notes, rather than jockeying for top position.Read more >
Demographic trends as much as any other factor help explain the relatively modest economic growth and low interest rates that have defined the post-recession period in the United States, according to a diverse panel of experts convened by Prudential in New York. The conversation was dominated by talk of interest rate trends, global demand for goods and services, and U.S. Federal Reserve policy—but more than in the past simple demographic factors were a major topic of conversation.Read more >
Small Talk
Late afternoon is when many workers experience a slump in productivity, according to a survey from Accountemps. And, nearly one-third of workers surveyed said they become more productive before a major holiday.Read more >

ON THIS DATE: In 1816, the first savings bank in the U.S., the Philadelphia Savings Fund Society, opened for business. In 1823, U.S. President James Monroe outlined his doctrine opposing European expansion in the Western Hemisphere. In 1901, Gillette patented the KC Gillette Razor. It was the first razor to feature a permanent handle and disposable double-edge razor blades. In 1939, New York’s LaGuardia Airport began operations. In 1969, the Boeing 747 jumbo jet got its first public preview as 191 people flew from Seattle to New York City. Most of the passengers were reporters and photographers. In 1970, the Environmental Protection Agency began operations. In 1982, doctors at the University of Utah implanted a permanent artificial heart in the chest of retired dentist Barney Clark. He lived 112 days with the device. The operation was the first of its kind. In 2001, Enron Corp. filed for Chapter 11 reorganization. The filing came five days after Dynegy walked away from an $8.4 billion buyout. It was the largest bankruptcy in U.S. history.

 

WEDNESDAY WISDOM: “How beautiful the leaves grow old. How full of light and color are their last days.”—John Burroughs, naturalist and nature essayist, active in the U.S. conservation movement

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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