Products August 7, 2012

Russell Rolls Out Series of Target Duration LDI Funds

Russell Investments unveiled a series of six target-duration liability-driven investing (LDI) commingled trust funds.
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Each LDI fund will be benchmarked to a comparable composite of the Barclays-Russell LDI Index Series.

The Russell Target Duration LDI Funds seek to provide high quality, mostly corporate bond-based exposure to fixed-income securities which closely match those found in discount curves used to value U.S. pension liabilities. The funds are designed to be used in combination as part of an overall LDI program, but also aim to achieve modest outperformance versus their respective Barclays-Russell LDI indices by combining diversified adviser styles and strategies over a full market cycle.

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“The new Russell Target Duration LDI Funds act as building blocks to create client-specific LDI strategies that provide a closer cash flow match of assets to liabilities than can be achieved through a single long credit strategy,” said Martin Jaugietis, CFA and director, head of LDI solutions. “They also contain less mark-to-market basis risk versus liabilities discounted using a corporate yield curve than comparable swaps-based target duration funds.”

The fund names will reflect target durations. The Russell LDI Fixed Income Fund will be available in 6-, 8-, 10-, 12-, 14- and 16-year options.

Calvin (Chenglong) Gong, CFA, FSA and CMT, serves as the portfolio manager for Russell’s overall LDI solution set, including the combined Target Duration LDI Fund series, while Gerard Fitzpatrick, CFA and FRM, serves as the portfolio manager for each individual LDI fund. As the portfolio manager responsible for the LDI hedging solution for U.S. institutional clients, Gong works closely with Jaugietis and reports to Jeff Hussey, Global Chief Investment Officer, Fixed Income.  

 

Data & Research August 7, 2012

DC Participants Saving Too Little

Although the majority of defined contribution (DC) plan participants say a DC plan is their primary retirement savings account, they are not putting enough in.
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A survey by Diversified found nearly seven in 10 (69%) respondents admitted that their DC plan at work was their only or primary retirement account. And despite the fact that the majority surveyed were at least middle-age (68% said they were 46 years old or older) with a reasonable income (64% made at least $75,000 annually), more than half (54%) said they had less than $100,000 saved for retirement. Thirty-seven percent had less than $50,000 saved. Only 3% said they had $1 million or more saved.  

Sixty-one percent of DC plan participants surveyed said they were saving 10% or less of their annual salary—with 25% saying they were saving 5% or less. Only 19% said they were contributing significant funds into their retirement account—saving more than 15% annually.    

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The survey also found more than one-third (34%) either “guessed” or “made up” estimates for the income they will need in retirement; and only 30% said they consulted with a professional for help setting their goals. Two-thirds admit that they could use more guidance on how much money they will need in retirement.   

“There’s no reason to guess,” said Patricia Advaney, senior vice president, participant solutions for Diversified. “With the abundance of help available—from online tools to guidance to advice—it’s much easier today for plan participants to calculate a retirement income goal, then take appropriate actions to get there.”    

The good news is that 38% of participants reported that they had increased the amount of money they are saving for retirement this year over last year. Eleven percent took a loan against their DC plan over the past 12 months, and 3% said they took a hardship withdrawal.    

The survey was conducted via e-mail by Diversified in the first quarter of 2012 among 3,370 DC plan participants in plans administered by a wide variety of organizations.

 

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