Products February 23, 2017

Investment Products and Service Launches

HealthSavingsAdministrators Launches HSA Featuring Franklin Templeton Funds; Natixis ESG TDF on the Horizon; Wilshire Associates Rolls Out Equity Hedge Fund Index; and more.
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HealthSavings Administrators Launches HSA With Franklin Templeton Funds

The new health savings account (HSA) product by HealthSavings Administrators will exclusively provide investors with access to 17 Franklin Templeton Investments spanning asset classes and strategies. HealthSavings says that upon opening an account, participants will be able to invest in one or more of these funds via itsfirst-dollar investment program, which enables accountholders to save for both current and future health care expenses without large minimum balance requirements.

“In order to make the best decisions toward adequately and efficiently saving for retirement health care expenses, investors need to understand all available tools and options—and that includes HSAs,” says Kirk Hoewisch, president of HealthSavings. “Franklin Templeton’s expertise in offering investment strategies to help investors save for retirement perfectly complements our retirement-focused HSA program.”

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Kevin Murphy, vice president, senior retirement plan strategist believes the health savings arena is in the early stages of undergoing a shift similar to the one in the retirement space with the growing popularity of defined contribution (DC) plans.

“Helping individuals achieve an optimal retirement outcome is at the core of our firm,” says Murphy. “The HealthSavings HSA featuring our funds is a great tool for individuals to leverage in working with their financial adviser to prepare for their medical expenses in retirement.”

HSAs are designed as long-term investments vehicles in which money is reserved for eligible health care expenses. It offers a “triple-tax” advantage of having money deposited tax free or tax deductible, and remains tax free when used to pay or reimburse for eligible medical expenses.

HealthSavings works with FPS Trust Company as its custodian, and provides investment-focused service through its cloud-based platform, the Investment Provider Xchange. To learn more, visit HealthSavings.com.

NEXT: Natixis ESG TDF on the Horizon

Natixis ESG TDF on the Horizon

Natixis Global Asset Management has filed a registration statement with the Securities and Exchange Commission (SEC) to register a series of target-date mutual funds in the U.S. focusing on a sustainable investing approach.

The Natixis Sustainable Future Funds are designed to include ten funds with vintages ranging every five years from 2015 to 2060. These funds will select securities based on positive environmental, social and governance (ESG) criteria with respect to such issues as fair labor, anti-corruption, human rights, fair business practices and mitigation of environmental impact, the firm notes.

Natixis research points to a growing preference for investing in companies with favorable ESG track records. Most respondents to the firm’s 2016 Global Survey of Individual Investors stressed the importance of investing in companies that are ethically run (83%), have a positive social impact (70%) and good environmental records (70%). In addition, the Natixis 2016 Retirement Plan Participant Study found that especially Millennials favor ESG investing, with 71% of this age group reporting they would be more willing to contribute to their retirement plan if they knew their contributions were also encouraging sustainable efforts.

“Many Americans are challenged to save enough for retirement, especially younger workers without company pensions who fear that Social Security won’t be available when they retire,” says Ed Farrington, Natixis’ executive vice president for retirement strategies. “Comprehensive retirement plans that offer a wider range of choices, especially investments that reflect workers’ values and beliefs, encourage an increased level of saving that would help investors reach their retirement goals.”

The proposed funds would be advised by NGAM Advisors, L.P. and sub-advised by Natixis Asset Management U.S.

Among other investment constituents, the funds will incorporate equity and fixed income allocations that leverage the ESG expertise of Mirova, an affiliate of Natixis AM U.S., which has managed responsible investment solutions for almost 30 years. Natixis also has selected Wilshire Associates Incorporated as a sub-adviser to provide glide path design and portfolio allocation services.

The funds are expected to launch in the first quarter 2017.  

A registration statement relating to these target date funds has been filed with the SEC but has not yet become effective, and the fund’s prospectus may change.

NEXT: Wilshire Associates Rolls Out Equity Hedge Fund Index

Wilshire Associates Rolls Out Equity Hedge Fund Index

Wilshire Associates has added a new index to its “Powered by Wilshire” lineup. The BRI Long/Short Equity Index. Created and owned by BRI Partners and calculated by Wilshire, the index is designed to provide a beta benchmark for active long/short U.S equity hedge fund strategies.

Wilshire reports this index uses a systematic, rules-based approach to create a dynamically hedged portfolio of equities delivering the same risk/return profile as long/short equity hedge funds. It leverages multiple selection criteria metrics such as value, growth and volatility to identify large-cap and mid-cap equities for index inclusion. The long portion of the index is then dynamically hedged using broad-based equity futures.

“Wilshire Analytics is thrilled to help fuel yet another Powered by Wilshire index offering from BRI,” says Robert J. Waid, managing director at Wilshire Associates. “Wilshire’s calculation and analytical expertise combined with BRI’s innovative, proprietary systematic indexes demonstrate the value of a Powered by Wilshire approach which can help clients bring new investment benchmark strategy ideas to market quickly.”

BRI founder Adam Brass adds, “We have a singular objective: to create a family of indexes that aim to measure the beta of alternative strategies more cost-effectively and efficiently. We are proud to leverage Wilshire’s deep index calculation and analytical expertise to bring to investors the first of a next generation of indexes in this area. Each index is designed to be low-cost, transparent, scalable and liquid. Our indexes make it easier to quantify and demystify hedge fund strategies. They allow investors to reliably measure alternative strategy beta against which to measure active hedge fund managers. The timing could not be better.”

For more information about the BRI index, visit wilshire.com.  

NEXT: Willis Towers Watson Launches Institutional Asset Management Exchange

Willis Towers Watson Launches Institutional Asset Management Exchange

The Asset Management Exchange (AMX) by Willis Towers Watson is an institutional asset management marketplace where asset owners can invest in external asset managers. Through a centralized back office and standardized fund infrastructure that bypasses the investment industry’s cost and resource duplication, the exchange will aim to give asset managers access to capital while cutting overall value leakage.  

Willis Towers Watson says it also will deliver scale benefits to both sides of the market while increasing transparency and asset owner control.

“In the last 20 years, our lives have been transformed by innovation. Technology is breaking down barriers and challenging the inefficiencies that have burdened many industries for far too long,” says John Haley, CEO of Willis Towers Watson. “The resulting marketplaces tend to be fairer, quicker and more transparent. They give buyers better choice and control, open up new customers for sellers and can rapidly become global in nature. We recognize the power of this trend and are backing AMX to be a catalyst for change in institutional investment.”

AMX first will launch in the U.K. and will initially focus on providing cost-effective and simpler access to hedge fund strategies, with additional asset classes following later in the year.

The firm notes AMX is designed to centralize the investment process through reduced duplication of cost, resources and time; economies of scale in relationships with other service providers, such as market counterparties, clearers and prime brokers; standardized legal documentation; timelier and more accurate reporting through centralized data; and reduced complexity via standardized infrastructure and a centralized back office.

Data & Research February 23, 2017

The Psychology of Satisfaction With Retirement

Defining exactly what it means to be “satisfied” with retirement is a difficult matter, complicating the effort to assess the real impact of the global shift from DB to DC. 
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A new research paper from Vanguard examines the “ongoing retirement transition” playing out across four nations that share deep social and economic ties, but which also have important degrees of cultural independence: the U.S., Canada, the United Kingdom and Australia.

As the paper lays out, these countries are all in “various stages of a shift from defined benefit (DB) to defined contribution (DC) workplace retirement systems.” In each country, people are living longer than ever, and this has challenged the basic assumptions about the workability of providing even basic DB benefits. People in each country also have varying degrees of access to financial advisers and planning support. 

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“The Australian superannuation system is the farthest along the spectrum; its universal superannuation system is largely DC-oriented,” researchers explain. On the other end, the United Kingdom “has only recently begun to make the shift from a DB- to a DC-centered private system.”

Comparing the retirement outcomes of the systems of these four nations is difficult but also potentially highly informative for the objective of “uncovering any areas of unmet needs during the retirement transition,” particularly in the U.S., where there is a real middle ground that has been established between a DC and a DB approach to workplace retirement planning. And so the researchers ask, how has retirement satisfaction shifted over the years in these countries, and what can this tell us about the “success” of the transition toward DC?

Data cited by Vanguard shows this is not an easy matter to clarify, as retirees in all four countries show markedly higher satisfaction with their current financial situation than pre-retirees. The gap is in fact largest in the still-DB-focused UK, where 52% of pre-retirees are highly satisfied with their financial situation, compared with 78% of those who are actually retired. Retirees in the UK are also markedly more likely than pre-retirees to say they “can spend freely, within reason.”

In the U.S., private sector workers who are pre-retirees are slightly more likely to be highly satisfied with their current financial situation than their UK counterparts, at 53%, but at the same time only 65% of U.S. retirees say they are highly satisfied financially. This is pretty far below the 78% uncovered for the UK.

Overall the research seems to present the picture that both DC and DB can work fine to support the retirement needs of a working population—and that they can work fine together, too. But drawing deeper conclusions is tricky: It is also a surprisingly slippery matter to analyze just what is going on with people’s financial confidence in that period before and after the real first day of retirement. In a sense it is only when an individual reaches a high degree of satisfaction with their financial situation that they would even first conceive of retirement as an actual possibility—so is it really that informative to compare pre-retiree and retiree satisfaction this way, whether within or across countries?  

There is also the fact to consider that some people are, to greater and lesser degrees, forced into retirement, say by a progressively worsening health issue or a lack of relevant skills to suit employers’ needs. The Vanguard research makes a strong attempt at constellating such considerations. The full report can be downloaded here. 

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