Products August 5, 2008

Benefits Firm Offers Fiduciary Checkup Product

A St. Louis-based firm has unveiled Fiduciary Health Check to help employers meet their legal responsibilities for their retirement plans.
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A Benefit Plans Plus news release said Fiduciary Health Check offers:

  • Help in identifying fiduciaries (named & functional),
  • Plan document review (terms of plan, eligibility, distribution options & model amendments),
  • Required employee communications (disclosures, safe harbor, reporting, QDIA notices, salary reduction notices & multiple statements),
  • Vendor specific review of products, features and tools,
  • Compliance testing (ADP, ACP, etc.),
  • Form 5500 (timely contributions & proper filing),
  • Insurance coverage review (fidelity bond, fiduciary insurance policy).

Additional consulting services include:

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  • Fee analysis (total plan cost including billed fees, investment expenses, asset charges, recordkeeping),
  • Fiduciary investment process review (investment policy, monitoring, diversification & performance),
  • Plan design (contribution efficiency & after-tax cost), and
  • Fiduciary compliance management (corrections assistance, vendor and adviser searches).

More information is available here.

Products August 5, 2008

Morningstar Announces Fund Classification Changes

Morningstar has added two categories and one broad asset class to its proprietary classification system for mutual fund portfolios domiciled in the United States.
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A Morningstar news release said the new mutual fund categories are:

  • Global Real Estate: These funds invest primarily in non-U.S. real estate securities, but may also include U.S. real estate securities. Such securities include debt and equity securities, convertible securities, and securities issued by Real Estate Investment Trusts (REITs). At least 40% of the fund’s holdings must be non-U.S. securities. As of June 30, 2008, there were 45 mutual funds and 11 exchange-traded funds (ETFs) in this category.
  • Currency: These funds invest in U.S. and foreign currencies through the use of short-term money market instruments; derivative instruments, including but not limited to, forward currency contracts, index swaps and options; and cash deposits. Morningstar Ratings are not assigned to the funds in this category because their strategies vary so widely. As of June 30, 2008, there were eight mutual funds and 26 ETFs in this category.

According to the announcement, Morningstar is also adding an “Alternative” broad asset class to its current set of five broad asset classes: U.S. Stock, International Stock, Taxable Bond, Municipal Bond, and Balanced. The Alternative broad asset class includes the following categories: Currency, Long-Short, Precious Metals, and Bear Market.

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The new Global Real Estate category is assigned to the International Stock asset class.

“The number of currency funds is growing rapidly, especially among exchange-traded funds, and will be better compared to their peers in this new category,” said John Rekenthaler, vice president of research for Morningstar, in the announcement. “The addition of an “Alternative’ asset class is a more appropriate classification for currency funds, as well as long-short, precious metals, and bear market funds.’

The company said as a result of the new categories, the Morningstar Rating for funds that are assigned to a different category may change because they will now be rated against a new peer group.

The new category assignments were to be available in Morningstar’s Internet-based products Tuesday, and will be rolled out in all Morningstar products by the end of August.

The Morningstar Category Classifications methodology is available here.

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