Investing October 17, 2016

Passive Funds Lead Investor Demand in September

In addition, the approaching deadline for money market funds to comply with new regulations caused an even greater bifurcation among taxable money market funds, Strategic Insight reports.
Reported by

Net new flows to long-term mutual funds and exchange-traded products (ETPs) totaled $14.1 billion in September, according to Strategic Insight, parent company of PLANSPONSOR.

Active and passive strategies continued to experience divergent trends in net investments. Passive funds led demand with $37.7 billion of inflows (including $27.5 billion to ETPs), while actively managed funds experienced aggregate net redemptions of $23.6 billion in September.

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

Taxable Bond funds saw the strongest demand among long-term funds, attracting $22.1 billion of net inflows. The space’s year-to-date flows of $168.4 billion represent a substantial increase over the $39.9 billion seen during the first nine months of 2015. Taxable Bond flows in September were fairly evenly split between active and passive strategies, as active funds experienced net investments of $9.4 billion and passive funds gathered net flows of $12.7 billion.

Active U.S. and International/Global Equity funds saw outflows of $36.9 billion in September, while index equity exposures attracted net inflows of $24.6 billion. Net outflows among active funds were driven by redemptions in large capitalization strategies. Global and Alternative strategies, including Global Total Return, Managed Futures, and Commodities Broad-Based, gathered positive net flows among active funds in September.

Net redemptions from Money Market funds in September totaled $21.1 billion. Taxable Money Market funds experienced comparatively flat inflows of $1.9 billion, while Tax-Free Funds saw $23.0 billion of net withdrawals. The approaching October deadline for money market funds to comply with new regulations caused an even greater bifurcation among Taxable Money Market funds, as government funds saw net deposits of $220 billion while prime money market funds experienced net redemptions of $245 billion.

Participants October 17, 2016

Employees Benefit From Early Focus on Income

Researchers call it troubling that only about half of Millennials are taking advantage of the power of compound interest in building a secure financial future. 

Reported by

Data from the Lincoln Financial Group American Consumer Study shows that individuals increasingly understand they are going to be responsible for their own retirement security.

While awareness of retirement challenges is high, according to the study, still more than a third of Americans (36%) say they wish they were putting more money into their retirement savings plans. More than half are prioritizing paying off short-term debt over saving for retirement. This is especially prevalent among Millennials, the survey finds, only 56% of whom are contributing to a retirement savings plan.

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

Researchers call it troubling that only about half of Millennials are taking advantage of the power of compound interest in building a secure financial future. Like the older generations, many Millennials anticipate a significant portion of their retirement income to come from Social Security, despite persistent uncertainties about the program’s long-term fiscal future.

Beyond a building focus on retirement income and how it will be sourced, the study also shows that savers want access to both online tools and face-to-face discussions with advisers and financial educators. Among those surveyed, 68% suggest access to face-to-face discussions remains highly important, while 73% feel online tools are also important when they’re communicating with a company that offers retirement products.

“There is a lot of focus on technology today, and it is important,” Ohl said. “But as the results of the study showed, technology alone isn’t enough. It’s the combination of technology and personalized service that will truly drive positive outcomes.”

The research concludes that establishing a focus on retirement income early in one’s working life will be essential for a financially healthy retirement in a world without widespread access to pensions.

Alongside the survey data, Lincoln Financial Group published a participant-centric video series to teach the fundamentals of investing and to “encourage employees to take actions today that can help them meet their retirement goals tomorrow.”

«