Deals & People April 25, 2011

Daily Access to Use CLS Investments’ Model Portfolios

Mid Atlantic Trust Company (MATC) announced that third party administrator Daily Access Corporation will be using the firm’s ModelxChange platform.
Reported by

The model portfolios are coming from CLS Investments and include the CLS Wealth Accumulation/Principal Guard AdvisorOne Models and the CLS ETF Models.    

ModelxChange allows 401(k) professionals to incorporate investment models into a retirement plan, all through a single, Web-based interface, MATC reports. The platform streamlines the process for plan recordkeepers of integrating and processing model portfolios into a retirement plan, automating many of the steps and eliminating many of the complexities that typically exist with this process.    

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

For the professional money manager, ModelxChange  provides a single system for the creation, execution and on-going management of investment models for the 401(k) marketplace. Through its interface, managers can set-up and manage their investment models on ModelxChange, and then deliver those models and any investment changes to each individual 401(k) plan automatically.  

Ryan Byrne, V.P. of Business Development for CLS Investments, LLC explained in the announcement that “with ModelxChange, we now have the ability to trade just once whenever we make a change to a model.  All plans utilizing our models through any 401(k) record keeper are updated simultaneously, saving us a lot of time and hassle.  We can also easily track billing for each plan on an automated basis, and this coupled with other significant cost saving features of ModelxChange allow us to deliver a much more cost efficient product to the participants.”
The Markets April 25, 2011

Fund Managers Use Institutional Shares to Stay Competitive

Cerulli Associates' latest managed accounts-focused research indicates mutual fund advisory programs (MFA) will experience slower growth in the coming years.
Reported by

According to The Cerulli Edge: Managed Accounts Edition, 1Q 2011, in an effort to capture additional opportunities and combat the variables driving slower growth in MFA programs, firms are focusing on share class pricing.  

Cerulli found that MFA programs have become the single greatest source of new asset flows through managed accounts for asset managers. Cerulli estimates that assets in MFA programs will surpass $1 trillion by year-end 2014. This includes the expectation of $260 billion in total net flows during the next four years and equates to a CAGR of 14.5% for that time period (which can be compared to a 15.8% CAGR over the last five years).   

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

According to Cerulli, the variables driving this slower growth include: 

  • Increasing use of rep-driven programs and unified managed accounts (UMAs); 
  • Decline in the proportion of assets that transition from DC plans to IRA rollovers (as IRA rollovers have long been an important source of assets for mutual fund advisory programs); and 
  • Increasing use of ETFs in rep-driven programs.

Cerulli's research indicates that 72% of MFA programs currently use institutionally priced share classes. In addition, 77% of MFA program sponsors believe that fund managers will need an institutional share class to be competitive in the next three years.   

Institutional share classes often have a lower expense ratio, primarily due to 12b-1 or distribution fees being stripped out, the study explains. Cerulli views the shift to share classes without 12b-1 fees as a progression the industry is undertaking that won't occur overnight, and some programs will not move away from using 12b-1 share classes unless compelled through regulation.    

"Accessing the broadest spectrum of managed account program distribution will undoubtedly be facilitated by offering share classes built for advisory platforms and without 12b-1 fees or trailers," the report says.

«