Products April 7, 2022

Investment Product and Service Launches

New York Life Investments announces new brand for its private markets alternatives boutique; State Street Global Advisors launches ESG-focused ETF.

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Art by Jackson Epstein

Art by Jackson Epstein





New York Life Investments Reveals New Private Markets Alts Brand

New York Life Investments has announced Apogem Capital as the new brand for its dedicated private markets alternatives boutique, bringing together the capabilities and investment teams of GoldPoint Partners, Madison Capital Funding and PA Capital. Apogem Capital has approximately $37 billion in assets under management and provides a broad range of private capital solutions tailored to middle market companies.

Apogem Capital offers sponsors and their portfolio companies access to a streamlined suite of capital solutions. These include direct lending, junior debt, primary and secondary private equity fund investments as well as equity-co-investments, GP stakes, real assets and long/short equity.

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With the brand launch, Apogem Capital will seek to spark ideas, new strategies and new possibilities across the alternatives landscape. As a result of the combination, the New York Life Investments Alternatives brand will be retired in favor of Apogem Capital, which launches with a new brand identity, logo and website to reflect the unified brand of the boutique.

State Street Global Advisors Launches ESG-Focused ETF

State Street Global Advisors, the asset management business of State Street Corporation, has announced the launch of the SPDR Nuveen Municipal Bond ESG ETF. Sub-advised by Nuveen, the new, actively managed fund is designed to invest in municipal securities from issuers that are leaders in their sector in delivering environmental, social and governance outcomes or whose proceeds are used toward positive environmental or social projects.

“The prospect of higher taxes coupled with rising uncertainty surrounding future interest rate hikes have increased demand for actively managed municipal bond ETFs,” says Brie Williams, head of practice management at State Street Global Advisors. “At the same time demand for municipal bond exposure is growing, investors are increasingly looking beyond equities for ESG exposure.”

With over seven decades of collective experience investing in municipal bonds, Tim Ryan, Shawn O’Leary and David Blair will leverage Nuveen’s proprietary ESG Municipal Bond Scoring Tool to select bonds from issuers that are leaders in environmental stewardship, strong governance and positive social outcomes. The strategy will primarily consist of investment-grade, tax-exempt municipal securities ranging from two to 17 years in maturity issued by U.S. municipalities. To identify potential municipal bonds for investment, Nuveen utilizes a value-oriented strategy which is designed to identify higher-yielding and undervalued municipal bonds that offer above-average total return potential.

“As investors become more familiar with ESG-integrated strategies, Nuveen has created a proprietary framework that is designed to identify the municipal bond issuers that support income generation for investors and achieve positive ESG outcomes in their communities,” says Tim Ryan, municipal portfolio manager at Nuveen. “The fund is also designed to provide exposure to bonds whose proceeds are used towards positive environmental or social projects addressing critical issues including climate change, environmental degradation, inequality, poverty and justice and are aligned with the UN Sustainable Development Goals.”  

SSGA Funds Management Inc. serves as investment adviser to the new fund, and Nuveen Asset Management LLC serves as investment sub-adviser.

Data & Research April 6, 2022

The Potential Impact of 401(k) Loan Default Protection

Research from the Employee Benefit Research Institute shows 401(k) plan loan defaults that occur as a result of job changes or terminations are a significant, but addressable, source of retirement account leakage.

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Overall, U.S. Department of Labor data indicates that 401(k) plan loan amounts tend to represent only a small portion of a given investor’s total plan assets, but a recent Employee Benefit Research Institute analysis shows that defaults on retirement plan loans collectively produce significant reductions in retirement balances.

Specifically, EBRI’s data suggests that 401(k)s could collectively preserve a whopping $1.9 trillion in participant retirement savings by enrolling participants who take out loans from their 401(k) into 401(k) loan protection, which protects employees from defaulting. According to the analysis, a typical 401(k) loan default will cost, over the course of a career, more than $150,000 for average borrowers ages 25 to 34, more than $184,000 for borrowers ages 35 to 44, more than $194,000 for borrowers ages 45 to 54 and more than $195,000 for borrowers ages 55 to 64.

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In its report, the EBRI uses its Retirement Security Projection Model to simulate the retirement income adequacy for all U.S. households between the ages of 35 and 64. The RSPM reflects the real-world behavior of 27 million 401(k) participants, as well as 20 million individuals with individual retirement accounts.

The RPSM was used to simulate the increase in the present value of the 401(k) account balances—both with and without an automatically enrolled loan protection program. The report runs a baseline scenario assuming there was no auto-enrolled loan protection program in effect and flagged each year, if any, that a 401(k) participant was assumed to have a loan default. Then, another simulation was run, assuming the protection program was in place. In basic terms, such a protection program may be set up such that a participant’s loan is automatically repaid in the event of death or disability. In the event of involuntary job loss, the insurance provider may help repay the loan while the participant looks for another job.

“Loans provide 401(k) participants with access to their retirement savings during emergencies. Unfortunately, when employees leave their jobs, they default and incur taxes, penalties, and often cash out their entire account,” says Custodia Financial CEO Tod Ruble, whose firm sponsored the EBRI research and is a provider of 401(k) loan insurance. “Loan default losses don’t have to happen, and this research clearly shows the need for employers to safeguard their workers with auto-enrolled 401(k) loan protection. Protecting loans will reduce America’s retirement savings shortfall by trillions of dollars.”

Also noted in previous research, an additional way to improve retirement income adequacy could be the use of auto portability. As with loan defaults, there is a severe leakage problem when workers without loans move to a new employer, particularly when they have only small accounts. In such cases, investors must completely start over when it comes to saving for retirement. Using technology to save both time and resources, automatic portability solutions seek to help limit leakage by seamlessly moving retirement accounts from the old employer to the new employer.

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