SDA, Core Returns Suffer in Q2

The Security Trust Company (STC) Quarterly Defined Contribution Investment Returns Index found that individually directed brokerage account returns averaged a negative 6.34%, compared with a loss of 6.79% for core options.  Separately managed accounts fared better, losing 5.57%, on average for the quarter.

Not surprisingly, among core mutual fund options tracked by STC, only bond funds and money market/stable value options managed positive returns, 1.35% and 0.86%, respectively.

That was a disappointing turnaround from the first quarter of 2002, where the aggregate return for individually directed broker accounts was 1.55%, compared with 1.16% for separately managed offerings.

Some Comfort?
 
Still, retirement plan investors could take comfort from the fact that during the same period the NASDAQ suffered a 20.14% loss, and the Dow stumbled 13.14%.  However, the S&P 500 – a common component offering in many 401(k) programs – was down just 4.21%. 

Year-to-date core option mutual funds tracked by STC are down 6.42%, compared with losses of 4.79% in individually directed brokerage offerings and 4.41% in separately managed accounts.

The average individually directed account balance tracked by STC was $150,000, while the average managed account balance was $6,500,000.

The STC Index is a quarterly analysis of investment returns on selected participant-directed defined contribution plans for which STC provides trustee and custodial services.  The sample for the first-quarter index consists of 1,063 plans serviced by STC totaling approximately $7.2 billion in assets and covering an estimated 465,000 participants.  The 1,063 plans include 2,490 IDAs and 167 separately managed accounts. 

Phoenix, Arizona-based Security Trust Company provides institutional back-office trust services for financial service providers – including brokers, investment advisors, money managers, and record-keepers/TPAs – and their customers.