Data & Research May 31, 2018

Reported Gifts to Grads Indicates Millennials Understand Financial Issues Facing Them

Millennials are more likely than Gen Xers or Baby Boomers to give the gift of help with financial obligations, such as student loan payments and bills; financial education tools; and shares of stocks, bonds, mutual funds, etc.

Reported by

StreetWise, the E*TRADE quarterly tracking study of experienced investors, found 72% of survey respondents overall would advise recent graduates to take advantage of employer 401(k) plans. And 64% overall would advise them to start a portfolio, no matter how small.

These were also the top two pieces of advice from Millennials (58% and 59%, respectively), while Generation X and Baby Boomers rated taking advantage of employer 401(k) plans and spending less than they make the highest—77% and 66%, respectively for Gen X, and 86% and 81%, respectively for Boomers. E*TRADE says the study suggests Millennials are more focused on investing for retirement than many think.

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Millennials are the only generation most likely to give the gift of a financial account to a recent grad—45%, compared with 27% of Gen X and 22% of Baby Boomers. Gen Xers and Boomers prioritize cash as gifts—48% and 61%, respectively, compared with 31% of Millennials. Millennials’ gifts also indicate that generation understands the financial issues facing recent graduates. Millennials are more likely to give the gift of help with financial obligations, such as student loan payments and bills—39%, vs. 28% of Gen X and 18% of Boomers); financial education tools—36% vs. 24% and 12%, respectively; and shares of stocks, bonds, mutual funds, etc.—33% vs. 20% and 14%, respectively.

The survey also found 88% of responding investors overall believe recent grads are not very knowledgeable about saving and investing for retirement. Two-thirds (67%) of Millennials believe this, compared with 95% of Gen X and 99% of Baby Boomers.

The StreetWise survey was conducted from April 1 through April 11 among an online U.S. sample of 947 self-directed active investors who manage at least $10,000 in an online brokerage account. E*TRADE defines Millennials as those ages 25 through 34, Gen Xers as those 35 through 54, and Baby Boomers as those 55 and older.

Products May 31, 2018

Investment Products and Services Launches

MassMutual Introduces New TDFs; J.P. Morgan Updates TDF Selection Tool; and Krane Funds Advisors Creates CIT for Retirement Plans.

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MassMutual has introduced a new target date fund (TDF) family subadvised by a Legg Mason-affiliated manager, QS Investors, LLC, that aims to help reduce market volatility for retirement plan savers when they are most vulnerable to market losses: just before and right after retirement.

 

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The Legg Mason Total Advantage Funds, a series of bank-maintained collective investment funds sponsored by Wilmington Trust, N.A. and available through MassMutual 401(k)s and other defined contribution (DC) retirement plans, offers retirement savers a combination of upside return potential with the goal of reduced volatility. The funds incorporate both active and passive investment management strategies by investing in underlying funds that are managed by 16 different managers. A stable value investment component is part of the strategy to help retirement savers manage market volatility.

 

The Legg Mason Total Advantage Funds’ architecture gives investors access to not only Legg Mason managers but also to a wide array of external managers. QS Investors is one of Legg Mason’s institutional asset manager affiliates, with an expertise in multi-asset class portfolios.

 

“The five years before and after retirement can be a particularly vulnerable time for retirement savers,” says Tina Wilson, head of MassMutual Investment Solutions Innovation. “With a relatively short time horizon to recoup investment losses, pre-retirees and retirees risk significantly diminished assets and retirement income from market corrections and volatility. Unfortunately, some retirees may be taking more risk than they realize.”

 

The Legg Mason Total Advantage Funds seek to manage investment risk with a series of proprietary investment strategies, including Adaptive Asset Allocation and Next-Generation Diversification.  

 

J.P. Morgan Updates TDF Selection Tool

J.P. Morgan announced an upgrade to its Target Date Compass tool that advisers use to help plan sponsors make informed target-date fund (TDF) selections.  The new Target Date Compass is said to have easier, more intuitive navigation, deeper analytics, and greater customization. 

Target Date Compass was introduced to help defined contribution (DC) plan sponsors evaluate the critical differences among TDFs. The program asks plan sponsors to consider important plan criteria including objectives, risk tolerance, demographics and expected participant behavior.  Answers to these questions help plan decision-makers identify the Target Date Type that best matches plan goals and participant needs. This allows plan sponsors to concentrate on a group of funds that are likely to match the plan’s goals and objectives.

“With of the vast number of target-date fund choices in the market, it is virtually impossible to make an informed choice without exhaustive analysis of the fund universe,” says Catherine Peterson, global head of Insights Programs at J.P. Morgan.  “Target Date Compass allows advisers to conduct this analysis in a matter of minutes and generate custom reports that help meet fiduciary obligations with a well-defined process for making, documenting and defending target-date fund decisions.” 

Krane Funds Advisors Creates CIT for Retirement Plans

Krane Funds Advisors, the investment manager for KraneShares exchange traded funds (ETFs) has launched KraneShares MSCI China A-Share Collective Fund, a collective investment trust (CIT).

 

The CIT seeks to replicate the performance of its benchmark, the MSCI China A Inclusion Index, which is designed to track the progressive partial inclusion of Mainland listed Chinese securities (A-shares) in the MSCI Emerging Markets Index over time. It follows the same investment strategy as the KraneShares Bosera MSCI China A-Share ETF.

 

The trustee for the new CIT is SEI Trust Company, a wholly owned subsidiary of SEI Investments Company (SEI). SEI maintains ultimate fiduciary authority over the management of, and the investments made in, the CIT with Krane Funds Advisors, LLC as adviser.

 

The KraneShares MSCI China A-Share Collective Fund was developed specifically for qualified pensions including defined benefit and defined contribution plans, and complies with the fiduciary standards of the Employee Retirement Income Security Act (ERISA).

 

“This is a significant moment for China’s capital markets and for global institutional investors who begin to allocate their portfolios to the world’s second largest equity market,” says Jonathan Krane, CEO of KraneShares. “We believe this CIT is a solution for institutional retirement plans that track MSCI indexes to align with the benchmark as they incorporate the China A-share market into their portfolios.”

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