Investing

The retirement planning challenges facing workers today are by no means new or novel, nor are the many different types of solutions being debated by academics and policymakers.

During 2018, the $20 billion club shifted asset allocations significantly away from risky assets and into fixed income, Russell Investments found.

As the product set expands, knowledge about the topic of “ESG investing,” and how this relates to ERISA’s demands, is expected by many plan sponsor clients and prospects.

Nearly 90% of the days in the quarter saw net trading activity favor fixed income, according to the Alight Solutions 401(k) Index.

In recent years, hedge funds have not assumed sufficient risk to deliver attractive performance, but Willis Towers Watson suggests new approaches they can take to remain relevant.

There are obstacles to good comparisons for environmental, social and governance (ESG) investments, but in a white paper, Karen Kaufman-White, investment research associate at Strategic Benefit Services, indicates she believes that over time, more robust data will become available, facilitating enhanced reporting capabilities and standardization.

Chris Nikolich, with AB, and co-contributor to the research initiative, told PLANADVISER, “The whole purpose of this was to allow plan sponsors to compare their custom allocations to others managed by potentially other investment managers. That kind of peer information didn’t exist; there has been no ability for plan sponsors to gauge how similar or different their custom TDF glidepaths are to others.”

In 2018, single premium buy-out product sales peaked at $26 billion, more than 14% higher than 2017, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.

They are considering active, non-traditional passive, alternative, unconstrained and derivative investments, according to Fidelity

While passive target-date funds (TDFs) dominate the defined contribution (DC) retirement plan market, Cerulli suggests that touting advantages of active TDFs could make plan sponsors reconsider.

A Vanguard analysis still finds both “pure TDF investors,” or those who hold only a single TDF, and “mixed investors”—investing in a TDF in combination with other investments (or, rarely, hold multiple TDFs). 

Cerulli believes managed accounts will continue to gather assets as a customized solution for a targeted cohort of a plan’s overall participant population, as well as address decumulation and financial wellness concerns.

According to a Cerulli report, fee sensitivity, concerns about performance and regulatory confusion are headwinds to environmental, social and governance (ESG) investment adoption in defined contribution (DC) plans.

Account values fell sharply from the previous quarter and were 6.3% lower than the previous year, according to Charles Schwab’s SDBA Indicators Report.

On 89% of the trading days, 401(k) participants moved the majority of their money into fixed income, according to the Alight Solutions 401(k) Index

Strategic beta products offer advisers the opportunity to fine-tune investment exposures, but the strategies demand “increasing intellectual capital to select amid an abundance of options.”

CIT-based solutions grew, while mutual fund-based solutions declined in 2018, according to Sway Research.

Liability-driven investing is growing more important as pension plans broadly move into a phase where they are not growing but instead need to be focused on meeting their benefit obligations.