The Markets May 13, 2019

Investors Continue Moving from Equities into Fixed Income

April marks the 15th month in a row that 401(k) investors have been fleeing equities for the safety of fixed income, Alight says.

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The Alight Solutions 401(k) Index for April marks the 15th month in a row that investors have been moving out of equities and into fixed income. On average, a mere 0.014% of 401(k) balances were traded daily.

Nineteen of the 21 trading days in the month (90%) favored fixed income funds. Year-to-date, 401(k) investors have favored fixed income on 73 trading days (89%) and equity on only nine days (11%). April had two above-normal trading days. Year-to-date, there have been 11 such days.

Asset classes with the most trading inflows in April were bond funds (63% and $227 million in inflows), international funds (11%, $39 million) and target-date funds (TDFs) (10%, $38 million). Asset classes with the most trading outflows in April were large U.S. equity funds (47%, $170 million), company stock (35%, $127 million) and small U.S. equity funds (13%, $46 million).

Asset classes with the largest percentage of total balances at the end of April were TDFs (29%, $61.33 billion), large U.S. equity funds (26%, $54.60 billion) and stable value funds (10%, $21.14 billion). Asset classes with the most contributions in April were TDFs (47%, $549 million), large U.S. equity funds (20%, $240 million) and international funds (7%, $82 million).

All the common indices saw positive performance in April, according to Alight Solutions. The U.S. bond market was up just over 0%. Large U.S. equities were up 4.1%, small U.S. equities were up 3.4% and international equities gained 2.6%.

Products May 13, 2019

Principal Launches New Retirement Plan Package Aimed at Small Plans

The firm says it offers features often reserved for large plans, such as fiduciary support and interactive, digital tools.

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Principal Financial Group has introduced Principal IMPACT, aimed at 401(k) plans with assets between $1 million and $10 million. The solution is backed by a service team that supports advisers and their clients across every step of the plan design process, from onboarding to the annual review.

IMPACT includes interactive, digital resources to boost participants’ financial confidence. According to Principal Financial Group, participants who use these tools have Retirement Wellness Scores that are 10 points higher than non-users on average. The IMPACT solution also offers holistic financial wellness that goes beyond saving for retirement.

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The firm says IMPACT’s investment lineup is modernized, with zero revenue-share funds. Seventy-eight percent of the share class options are in the top half of their Morningstar category peer groups. IMPACT also offers ongoing fiduciary support and competitive and transparent pricing.

“We are really excited about the introduction of Principal IMPACT, which amplifies the ability of Principal to serve as a ‘one-stop-shop’ for multiple retirement plan needs across all employer and market segments,” says Jerry Patterson, senior vice president of retirement and income solutions at Principal, who notes that the firm also offers defined benefit, employee stock ownership and non-qualified deferred compensation plans. “This new offering brings together competitive pricing and services that are often reserved for large employers. Principal IMPACT helps employers take care of their employees’ future lives while spending less time on administrative complexity.”

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