Tag: passive investing

Simplifying a defined contribution (DC) plan’s investment menu could encourage more employees to participate in the plan, sources say.

Cerulli Associates points to active target-date fund (TDF) performance during market volatility and the ability to mitigate sequence of return risk for defined contribution (DC) plan participants as reasons to consider them.

Sway research finds target-date series that invest in passively managed underlying funds, as well as those that invest in collective investment trusts (CITs) have been increasing, while target-date series that invest in actively managed underlying funds saw their market share fall.

Jack Bogle set out to prove that mutual funds could operate independently, and do so in a manner that would directly benefit their shareholders; he said this was necessary to address “major corporate conflict” inherent to the traditional approach to stock fund investing.

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.

Their No. 1 objective for client portfolios is downside risk protection

Steve Deschenes, product management and analytics director at Capital Group, says, “The active-passive debate is an industry discussion which distracts investors from what can have a real impact on their portfolios.”

Looking at asset flow data provided by Wells Fargo, there is very little money going into the standalone index equity fund options being added to DC plan menus—and this is probably a good thing.

EY says the move from active to passive investing is one of them.