| | Investing | | TDFs Have Improved Participant Diversification | | Jeff Kletti, head of investments at Wells Fargo Institutional Retirement and Trust, sat down recently with PLANSPONSOR to offer an inside look at trends and challenges taking shape within the company’s sizable defined contribution (DC) plan book of business. Among various topics, the conversation focused in large part on plan sponsors’ embrace of passive target-date funds (TDFs), and how this trend includes some important points of subtlety that go beyond “active versus passive.” Kletti also took time to highlight the way retirement plan participants have, tied to the popularity of automatic enrollment into target-date funds, significantly improved the diversification of their retirement accounts.Read more > | | Greater Use of Passive Funds Built Directly on TDF Popularity | | Looking at the asset flow data provided by Wells Fargo, there is very little money going into passive standalone funds defined contribution plan sponsors are adding to their plans. Jeff Kletti, head of investments at Wells Fargo Institutional Retirement and Trust, says a number of factors are behind this—first that the investment lineup changes have been additions to plan menus, rather than replacement-reroutes, or “mappings,” as the DC industry parlance goes. “That approach, of actively mapping participants out of active options into passive options, is still rare on our platform at this stage,” Kletti confirms. “So, the point is, that these active-versus-passive trends are playing out with more subtlety than it might first appear. Virtually all of the ongoing flows into passive funds in our book of business have been coming from within the target-date fund context, not from stand-alone index funds.”Read more > |
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