The Markets July 11, 2012

ETF Assets Rebound in June

Exchange-traded fund (ETF) assets increased $43.2 billion, or 3.8%, in June, according to State Street Global Advisors’ (SSgA) ETF Snapshot report.
Reported by

As of June 30, 1,261 ETFs with assets totaling $1.2 trillion were managed by 39 ETF managers.  

Returns were good for the month, as the S&P 500 index gained 4.1% and the MSCI EAFE index increased 7%. Commodities were positive, with the S&P GSCI index up 1.2% and gold rising 2.6%. Bonds were relatively flat.  

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

ETF flows hit nearly $12 billion in June. The size-large cap category led with $4.9 billion of inflows. The fixed-income category had $4.7 billion in inflows.  

The top three managers in the U.S. ETF marketplace were BlackRock, State Street and Vanguard. Collectively, they account for approximately 83% of the U.S.-listed ETF market. The top three ETFs in terms of dollar volume traded for the month were the SPDR S&P 500 [SPY], iShares Russell 2000 [IWM] and PowerShares QQQ [QQQ].   

The ETF Snapshot report can be accessed here.  

 

Data & Research July 11, 2012

Automatic Features Leading to Greater Retirement Readiness

Retirement plan sponsors say automatic features are increasing employees’ retirement readiness, according to a study from Lincoln Financial Group and Retirement Made Simpler.
Reported by

The study found 94% of plan sponsors recognize the success of automatic features, including automatic enrollment, automatic escalation and qualified default investment alternatives (QDIAs), in helping them address their plan-related goals and say these features drive higher participation and deferral rates along with better investment performance.   

Eighty-five percent of plan sponsors reported that automatic features are especially effective in helping participants who consider themselves less educated on retirement matters. Ninety-seven percent of plan sponsors who have adopted the bundle of automatic enrollment, automatic escalation and QDIA say the advantages outweigh any perceived disadvantages.   

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Plans with automatic escalation experienced deferral rates of 8% or higher compared to the average deferral rates of 4% or less reported by the Plan Sponsor Council of America (PSCA) for the majority of plans.  

 

(Cont...)

However, the Lincoln Retirement Power study found that while new communication channels have emerged since the advent of auto features, they have not kept pace with cultural and generational shifts or the evolution of plan design. Only 51% of sponsors say they offer customized communication and only half (50%) have revamped communication materials since the introduction of auto features.   

Plan sponsors agree that employee communication must shift significantly when automatic features are adopted. That means moving away from education that is technical in nature - such as how to enroll or the investments offered - to engaging participants in a more meaningful discussion about their individual savings behaviors and strategies such as their future monthly retirement income, spending power and projected retirement lifestyle.  

“The strong combination of auto solutions plus outcomes-focused communication has the power to motivate people, in a positive way, to take an active role in their retirement readiness,” said Chuck Cornelio, president, Retirement Plan Services, Lincoln Financial Group.  

More information on the Retirement Power study is here.

 

«