The Markets November 16, 2009

Institutions, Advisers Still Like Alternatives, but Are More Cautious

A survey by Morningstar, Inc., and Barron's magazine found that despite questionable performance during the market downturn and hedge fund scandals, institutional investors and advisers still view alternative investments optimistically, although with greater scrutiny.

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More than 60% of institutions and advisers indicated that alternatives will be as important or more important than traditional investments over the next five years, according to a Morningstar release of the survey. The majority of institutions and advisers expect alternatives to account for more 10% of their portfolios over the next five years, with a quarter of institutions expecting alternatives to account for more than 25% of their portfolios.

For both institutions and advisers, the top three reasons for investing in alternatives remain the same as in last year’s survey: portfolio diversification, absolute returns, and exposure to different investment techniques, such as arbitrage or shorting. Institutions and advisers are much more concerned, however, about lack of liquidity and transparency than they were last year, the release said.

Hedge funds were the most popular alternative vehicles over the last five years, and institutions and advisers expect to continue to increase allocations to hedge funds over the next five years.

Both institutions and advisers tend to classify investments as “alternative” based on the investment’s strategy (i.e. absolute return), rather than the investment’s designation (i.e. mutual fund versus hedge fund). Compared to the 2008 survey, fewer institutions and advisers view real estate investment trusts and commodities as alternative asset classes.

Morningstar and Barron’s conducted the Web-based survey in late September through early October, among 89 institutions and 300 financial advisers. Survey results appear in the November 9 issue of Barron’s and online at Barrons.com. Additional results, including charts, can be viewed online at http://global.morningstar.com/2009Alternatives.

Deals & People November 16, 2009

New ING Team Serves Higher Ed 403(b)s

ING’s U.S. Retirement Services has recently formed a new Business Development Team dedicated to serving employer-sponsored higher education retirement plans across the country, and identifying new growth opportunities for this segment of the 403(b) market.

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According to an announcement, the members of ING’s new Higher Education Business Development Team are:

Kevin Brown, senior vice president—Brown is leading the team to broaden ING’s national focus on public and private higher education institutions. Prior to taking on this role, he was chief counsel and head of External Affairs, overseeing ING’s state and federal affairs group. Brown has held various executive positions in the Law Department at ING and with the former Aetna U.S. Healthcare.

Kate Lewis, vice president—Lewis oversees new business development and sales opportunities for public colleges/universities in the Western half of the country, working closely with ING’s local management in that territory.  In addition, she is responsible for creating and managing a national consultant relations strategy focused on the higher education market.

Gregg Holgate, vice president—Holgate is responsible for new business development and sales opportunities in the Eastern half of the country, working closely with ING’s local management in that territory. Holgate returned to ING from The Gabor Agency, where he served as president for three years. He began his career at ING in 1996.

Troy Dryer, national director—Dryer is focused on new business development and sales opportunities for private colleges/universities in the Western half of the country, working closely with ING’s local management in that territory. Since 1994, he has managed education client relationships. Prior to joining ING, Dryer worked with large university retirement programs and also served as director of operations for a regional third-party administrator.

Dawn Mazzola, national director—Mazzola has more than 15 years of experience within the financial services marketplace.  Prior to joining the team, she was head of product management for ING’s higher education market. Since joining ING in 1994, Mazzola has held various senior roles in product management, sales support and operations.

In the higher education market, ING serves more than 1,300 plans and 91,000 participants across all 50 states, with offices and representatives in the local communities where it does business, according to the company.

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