Taxable-bond funds had the best month of any asset class
with inflows of more than $17.7 billion. Municipal-bond funds, with
redemptions of $3.8 billion, was the only asset class to see outflows.
Investors added nearly $3.9 billion to multisector bond
funds in April, just short of the category’s record inflow of $4.2
billion in March, to drive inflows to taxable-bond funds.
Inflows to bank-loan funds declined for the third
consecutive month to $3.4 billion, although this monthly total would
easily have been a record in any month prior to December, Morningstar
said. Inflation-protected bond funds, with nearly $1.2 billion, saw
greater inflows in April than in any of the previous 12 months.
U.S. stock funds collected assets of $2.1 billion in
April, after losing nearly $1.0 billion to outflows in March. Small- and
mid-cap U.S. stock funds saw combined inflows of $3.4 billion while
large-cap funds suffered withdrawals, which was also the case in March.
International-stock funds, which have seen inflows of
$93.5 billion since April 2009, added another $2.9 billion in April.
U.S. stock funds have seen outflows of more than $56.2 billion during
the same period.
Non-Qualified Exec Benefits Popular for Restoring Lost Savings
The fifth annual MullinTBG-PLANSPONSOR Executive Benefits Survey
shows companies are using nonqualified deferred
compensation plans (NQDCPs) as a valuable tool for restoring weakened retirement
savings.
Nine out of ten companies continue to offer an NQDCP, and
over 80% indicate that their most important reason for doing so is to
provide a vehicle for accumulating assets that can generate adequate
retirement income. To this end, significantly more employers are
offering financial planning services to help their executives maximize
their nonqualified benefit opportunities and create sound investment
strategies.
For the first time since the
economic crisis, survey results show signs of a shift in focus away
from being reactive to volatility in financial markets and economic
uncertainty toward finding solutions that will rebuild savings and
generate income. Participants are favoring market-based options for
allocating NQDCP balances over more stable alternatives, such as fixed
crediting rates, and expressing dissatisfaction with benefit cuts
implemented as a cost-cutting measure in the aftermath of 2008.
They are also less likely to cite a lack of confidence in
company performance as a reason to opt out of an NQDCP. These responses
differ markedly from a year ago, when attention was primarily focused on
economic uncertainty and risk.
Participation rates in NQDCPs, which had held steady at
50% for several years, slipped slightly to 46.3%, but were at
57.6% for informally funded plans that provide a company match.
Participation in larger plans - those with at least 250 participants -
increased dramatically to 57% from just over 44% last year, nearly
offsetting decreases in smaller plans.
The survey found that overall, NQDCPs have held up
remarkably well through the economic upheaval and slow recovery. While
the retirement savings opportunity is their most prevalent rationale for
offering a NQDCP (80%), employers also favor them for allowing
tax-deferred savings opportunities limited under 401(k) plans and as a
tool for attracting and retaining top talent. A majority of respondents
reported that they informally fund their plans, though the number was
down nearly 7% from the all-time high reported last year to 64.6%, but
still greater than in prior years.
Guaranteed Lifetime Income Options
When
asked if they were interested in or actively considering offering a
guaranteed lifetime income option as part of their NQDCP, 17.8% of plan
sponsors surveyed for the fifth annual MullinTBG-PLANSPONSOR Executive
Benefits Survey responded in the affirmative, indicating that while the
vast majority seeks to provide executive benefits that will effectively
retire their key employees, they are also slow to warm to the idea that
an annuity-based offering may be a viable solution.
Other survey highlights include:
Companies continue to reduce or eliminate traditional defined benefit pension plans;
Significantly fewer companies reduced or eliminated 401(k) matches, down from 21.1% in 2009 to 12.3% in 2010;
The
number of executives who opted out of an NQDCP due to concerns about
higher future tax rates declined significantly to 26.2% in 2010;
Mutual
funds and corporate-owned life insurance continue to be the primary
informal funding vehicles for companies to manage NQDCP
asset-to-liability ratios and the popularity of both increased
significantly in 2010 while the use of cash decreased; and
The vast majority of companies find it more efficient to employ a third-party recordkeeper to administer their NQDCPs.