The Markets February 12, 2010

Domestic Stock Funds Reverse Flow in January

Mutual funds saw inflows of $44.5 billion in January, according to estimates from Morningstar, Inc.
Reported by

Domestic stock funds gathered $2.7 billion in assets, reversing four consecutive months of outflows, while international equity funds took in more than $8.1 billion—the biggest monthly inflow for the asset class since December 2007, according to a press release.

Meanwhile, bond funds continued to dominate all other asset classes, with investors adding $28 billion to fixed income funds during the month. Based on total net assets, fixed-income funds now represent approximately 30% of the mutual fund market, up from 19% at the end of 2007, Morningstar said. 

Although active funds still dominate the mutual fund market, passive strategies have increased their market share to 20%, up from 11% at the beginning of 2000.

Despite significant outflows from several Fidelity large-cap funds in January, the firm registered net inflows of nearly $1.6 billion. With inflows of nearly $16.2 billion in 2009, Fidelity has not come close to making up 2008’s outflow of $37.3 billion, Morningstar noted.

American Funds experienced outflows for the seventh straight month, but the pace of the firm’s outflows has slowed, and Davis Funds and Selected Funds, both run by Davis Advisors, saw outflows again last month. Ivy Funds had a strong month, paced by $709.2 million in inflows to Ivy Asset Strategy.

Morningstar’s report about mutual funds activity in January can is available at www.global.morningstar.com/janflows10.

Compliance February 12, 2010

DoL Posts Six EFAST2 User Guides

The Department of Labor (DoL) has posted on its Web site six EFAST2 user guides to assist with electronically filing Form 5500 for 2009 and later plan years.
Reported by

EBIA explained that under the DoL’s ERISA Filing Acceptance System II (EFAST2), filers can prepare and submit Form 5500s using the DOL’s free Web-based application called IFILE, although it is expected that the vast majority of filers will use EFAST2-approved third-party software.

The guides include:

  • EFAST2 Guide for Filers and Service Providers—This guide provides basic information about EFAST2 for Form 5500 filers and their service providers, including how to become an EFAST2 user and how to use the EFAST2 system once you have filing credentials. It also provides basic information on troubleshooting and DoL support services.
  • EFAST2 Tutorial—This comprehensive online tutorial shows the user how to register for credentials. It also walks the user through the EFAST2 workflow process for creating and submitting a filing with IFILE, including how to create and work with supporting schedules. Users choose from the lessons and move at their own pace, following instructions that walk them through the process.
  • EFAST2 IFILE User Guide—This guide provides detailed information and instructions for filers using IFILE. Among other features, the guide discusses the general workflow for preparing and submitting a filing, from how to create the Form 5500 (including schedules and attachments) to how to check the filing status of a submission.
  • EFAST2 Filing Search Guide—Under EFAST2, all Form 5500s created and submitted using IFILE or EFAST2-approved third-party software will be stored electronically and can be searched and viewed using the new EFAST2 Data Dissemination Service (DDS) application. The DDS application can be used by both the general public and those who have registered for EFAST2 electronic credentials (though registered users can also access certain filings that are not available to the general public). The search guide outlines the process for searching, viewing, and saving filings using the DDS application, and reminds users that only filings filed since January 1 will be available in EFAST2.
  • Most Common EFAST2 Filing Errors—This table includes a description of common EFAST2 filing errors, the error message that will be received when a particular error occurs, and methods for correcting or avoiding the error.
  • EFAST2 2009 & 2010 Third-Party Software Test Plan & Certification Procedures—This document describes the process that vendors must follow to produce EFAST2-approved Form 5500 filing software. Though oriented to third-party software vendors, the document addresses background information (e.g., the difference between filing preparation and transmission software) that may also be of interest to filers and preparers.

The guides are available at www.efast.dol.gov/fip/forms_pubs.html.

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