The Markets October 25, 2010

Russell Unveils Equal Weight Equity Indexes

Russell Investments launched the first five equity benchmarks in a series of equal weight equity indexes that reflect U.S. and global market segments.
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A news release said the new Russell Equal Weight Indexes manage for sector risk, and they can be replicated easily to serve as the basis of investable products.

According to the announcement, Russell’s approach to the construction of equal weight indexes is designed to address or eliminate issues such as inherent sector biases, potential capacity constraints and liquidity concerns, as well as high turnover and rebalancing issues. To address the concern of sector risk posed by constituent equal weight indexes, for example, Russell first applies its equal weight methodology within each of the nine Russell Global Sectors: Consumer Discretionary, Consumer Staples, Energy, Financial Services, Health Care, Materials & Processing, Producer Durables, Technology, and Utilities.

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The new indexes will be maintained with daily corporate actions and monthly share adjustments as well as re-weighted quarterly. They also will be rebalanced each June when Russell reconstitutes its global family of market capitalization weighted indexes.

Initially, the new family of indexes will feature the U.S. large cap Russell 1000 Equal Weight Index, U.S. small cap Russell 2000 Equal Weight Index, Russell Midcap Equal Weight Index, Russell BRIC (Brazil, Russia, India, China) Equal Weight Index, and the Russell Greater China Large Cap Equal Weight Index. 

Products October 25, 2010

BlackRock, SunGard Team up on Retirement Income Solution

BlackRock, Inc. and SunGard have announced a solution that will support the use of funds generating lifetime retirement income within corporate defined contribution (DC) plans.
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Through the SunGard Global Network (SGN), the BlackRock-SunGard solution will create an “income window” for DC plan recordkeeping firms — “providing seamless integration of retirement income generating funds into a plan’s administrative and transaction processes,” a press release said. The income window solution is among the first to meet information-sharing standards recently developed by The SPARK Institute for annuity based, lifetime income funds in retirement plans (see SPARK Releases Final Data Standards for Retirement Income Solutions).   

“The income window, which can be used by any recordkeeping firm, including third party administrators and advisers using SunGard’s Omni and Relius platforms, will provide access and the ability to trade lifetime retirement income funds through an integrated link to the SGN,” said Bob Ward, Chief Operating Officer of SunGard’s Wealth Management Business, in the announcement.  

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“Many plan sponsors have found it challenging to add funds specifically designed to help employees transform their accumulated retirement assets into secure retirement income,” said Chip Castille, Managing Director and head of BlackRock’s US & Canada Defined Contribution Group. “Now that barrier is being removed.”

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