Products September 11, 2014

ETF Strategist Opens Collective Fund to DC Plans

Exchange-traded fund (ETF) investment strategist iSectors LLC says its Post-MPT Growth Allocation product is now available as a collective investment fund (CIF) for tax-qualified, employer-sponsored defined contribution (DC) retirement plans.
Reported by

Advisers can access the fund through major custodial platforms. The trustee of the fund is Alta Trust Company.

The firm contends that advisers using the new CIF will continue to see the benefits of active asset allocation while also utilizing low-cost index ETFs. The addition of the iSectors Post-MPT Growth Allocation CIF is a natural progression in meeting the needs and demands of not only advisers but also plan sponsors and participants, as well, it says.

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The objective of the iSectors Post-MPT Growth Allocation is to achieve investment returns that outperform the S&P 500 stock market index with lower downside risk over a complete market cycle. The portfolio manager allocates and rebalances the portfolio among nine specific, low-correlated asset classes. The mathematical process for the strategy is guided by a series of economic and capital market factors such as unemployment, capacity utilization, money supply, inflation and interest rates.

The portfolio manager may invest up to 30% of the fund into a single asset class at any given time with the exception of government bonds, into which the manager may invest up to 50% of the fund at any given time. In addition, the portfolio manager may invest up to 33% of the fund in leveraged ETFs.

Historical performance of the iSectors Post-MPT Growth Allocation in separately managed accounts can be reviewed at www.isectors.com. A fund brochure is here.

The Markets September 11, 2014

401(k) Participants Turned Back to Fixed Income in August

When 401(k) plan participants traded their investments in August, they favored fixed-income funds over equity funds for 65% of the trading days, according to Aon Hewitt.
Reported by

This was a reversal from July when more trading days favored equity funds, but consistent with the rest of 2014. Aon Hewitt’s 401(k) Index showed transfer activity moved away from diversified equities (equity assets excluding company stock) by $78 million (.05%) in August. 

Stable value/GIC funds received the most inflows, with $61 million (28%), while bond funds took in $40 million (19%) and money market funds received $32 million (15%). The options with the most outflows were small U.S. equity funds with $93 million (44%), company stock funds with $64 million (30%), and mid U.S. equity funds with $40 million (19%) for the month. 

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August trading activity continued to be light in 401(k) plans, with only .020% of balances transferring. This marks the tenth consecutive month that trading activity was below .03%. Total transfer activity was $214 million or .13% of total assets, with zero days in August having above-normal trading activity.

Aon Hewitt notes that the global equity markets rebounded from a poor showing in July as the S&P 500 returned 4% and the MSCI All Country World ex-U.S. Index returned .6% during the month of August. U.S. small-cap stocks, as measured by the Russell 2000, outperformed their large-cap counterparts, posting a return of 5%. The emerging equity market posted its seventh consecutive month of positive performance, as the MSCI Emerging Markets Index gained 2.3%. The Barclays U.S. Aggregate Index, a measure of the U.S. fixed-income market, also posted positive performance during the month with a return of 1.1%, as the yield on the 10-year Treasury decreased, from 2.58% to 2.35%. 

After incorporating trading and market activity, participants’ overall allocation to equities was up slightly at 66% in August from 65.5% in July. Future contributions to equities decreased marginally, to 66.4% from 66.5%. 

More information is here.

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