March 13, 2012
--- Invest n Retire, LLC has been a big proponent of
using exchange-traded funds (ETFs) in defined contribution (DC) plans, and now
it has data to support its stance. ---
Plein, vice president of Invest n Retire, LLC, told PLANADVISER there is
a lot of pushback for using ETFs in DC plans. Plein says some people think
there is no need to use ETFs instead of index mutual funds because costs are
n Retire told plan fiduciaries that index funds do not compete with ETFs, but
there was no real study to compare the costs.
Invest n Retire therefore conducted a study and found—for the majority of plans—they would be better off using
ETFs than index mutual funds because ETFs offer substantially lower costs.
Plein says this is an important finding with fee disclosure requirements coming
into effect and the requirement that plan sponsors use investment options that
have reasonable fees. The findings offer incentive for sponsors to look into
using ETFs as an option.