Data & Research August 31, 2017

DC Participant Activity Stayed Steady in Q1 2017

A new study by the ICI finds that few DC plan participants stopped contributing to their plans in Q1 2017, and the rate of asset-allocation changes remained low. 
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Nearly all active defined contribution (DC) plan participants continued investing in their accounts during the first quarter of 2017, according to recordkeeping data gathered by the Investment Company Institute (ICI).

The ICI analysis finds only 1.1% of DC plan participants stopped contributing during this period.

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Moreover, asset-allocation shifts and withdrawal activity remained low during this time frame. According to the ICI, 4.6% of DC plan participants changed the asset allocation of their account balances, and 3.8% changed the asset allocation of their contributions.

The ICI points out that during the first quarter of the year, stock prices generally rose. On net, the S&P 500 total return index was up 6.1%.

In the first quarter of 2017, 1.3% of DC plan participants took withdrawals. The rate was about the same as it was during the first quarter of 2016. Levels of hardship withdrawals were also low, with only 0.4% of DC plan participants making them during this time period. The same share made hardship withdrawals in the first quarter of 2016.

Loan activity also slightly ticked down. At the end of March 2017, 16.6% of DC plan participants had loans outstanding, compared with 17.0% at the end of 2016. The ICI notes the trend follows a seasonal pattern observed during the last several years.

The ICI notes, “Two factors appear to influence DC plan participants’ loan activity: reaction to financial stresses and a seasonal pattern. Likely responding to financial stresses, the percentage of DC plan participants with loans outstanding rose from the end of 2008 (15.3%) through 2011 (18.5%). This pattern of activity is similar to that observed in the wake of the bear market and recession earlier in the decade … Loan activity appears to have a quarterly seasonal pattern: the first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters.”

Overall, the study finds that 28% of U.S. retirement assets were DC plan assets.

This data comes from the ICI’s “Defined Contribution Plan Participants’ Activities, First Quarter 2017,” report. The study tracks contributions, withdrawals, and other activity based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans. The full report can be accessed at ici.org.

Products August 31, 2017

Investment Products and Service Launches

Reliance Trust Company Partners with Northern Trust and Wilshire Launches ESG Intermediate Credit Index
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Reliance Trust Company Partners with Northern Trust

Northern Trust has been selected by Reliance Trust Company to provide back-office support including custody, fund accounting, and transfer agent services for a collective investment trust (CIT) subadvised by Driehaus Capital Management.

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Northern Trust’s Global Fund Services unit provides fund administration, global custody, and investment operation outsourcing solutions to more than 650 asset managers across the globe. It has experience in traditional and alternative investment vehicles.

“We are excited to be working closely with both Reliance Trust and Driehaus Capital Management to support this CIT fund for qualified retirement plans,” said Dan Houlihan, head of Global Fund Services in North America. “Our strong back-office service, expertise and technology, combined with Reliance Trust’s ERISA experience, bring together two parties with exceptional financial strength on behalf of asset managers like Driehaus Capital Management.”

Tom Seftenberg, managing director at Driehaus Capital Management, adds, “Reliance Trust and Northern Trust were selected as our CIT distribution platform based on their joint dedication to understanding our business and strategic goals through innovation and proactive engagement. Northern Trust’s culture of client service excellence and Reliance Trust’s commitment to oversight dovetail nicely with our investment responsibilities and distribution efforts.”

NEXT: Wilshire Launches ESG Intermediate Credit Index

Wilshire Launches ESG Intermediate Credit Index

Wilshire Associates has expanded its Powered by Wilshire index with the addition of the Sage ESG Intermediate Credit Index. It is designed to provide an index optimized for highest Environmental, Social & Governance (ESG) ratings as well as liquidity.

The Sage ESG Intermediate Credit Index uses a systematic, rules-based approach to identify securities from the Bloomberg Barclays US Intermediate Credit Index with optimal ESG ratings, while closely aligning duration and risk characteristics to the Bloomberg Barclays US Intermediate Credit Index.

This Powered by Wilshire index was created by its owner Sage Advisory Services and Wilshire is retained as the index consultant and calculation agent.

“Aligned with Wilshire as our index consultant and calculation agent, our objective was to create an index that maximizes exposure to positive ESG qualities,” said Bob Smith, president and chief investment officer at Sage Advisory. “ESG is gaining a lot of traction and this index will serve as a great example of how powerful this method of investing has become.”

For more information about the newly launched SAGE ESG Credit index, visit Wilshire.

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