Compliance February 16, 2017

New York Life Agrees to Settle Self-Dealing Suit

The lawsuit accuses the insurance company of offering its proprietary fund in its retirement plans when lower-cost options were available.
Reported by

In a case accusing New York Life Insurance Company of improperly favoring and thereby profiting from the use of its MainStay funds in its retirement plans, a settlement agreement has been reached by the parties.

New York Life has agreed to put aside $3 million in a fund to provide payment to the class represented by the lawsuit, the plaintiffs, and class counsel.

Get more!  Sign up for PLANSPONSOR newsletters.

The lawsuit focused on the MainStay S&P 500 Index Fund, owned and operated by New York Life Insurance Company and its subsidiaries. The complaint states that from 2010 to July 16, 2016, when the lawsuit was filed, the MainStay S&P 500 Index Fund had annual costs of 35 bps, or 0.35% per year, “more than 17 times higher than the Vanguard Institutional Index Fund, the S&P 500 index fund offered by Vanguard with annual expenses of only 2 bps, or 0.02% per year.”

While 35 bps is ostensibly pretty cheap for an investment fee compared with, say, an active retail mutual fund product, plaintiffs still suggest the plans could have easily invested in other brands of mutual funds ranging anywhere from 10 bps to 4 bps and below. “By retaining the MainStay S&P 500 Index Fund in furtherance of the financial interests of New York Life, the plans’ fiduciaries cost the plans’ participants millions of dollars in excess fees,” the complaint argues.

Text of the settlement agreement is here.

Products February 16, 2017

Investment Products and Services Launches

Nuveen launches investment trust portfolio, and Wilshire Associates releases ESG-weighted index.
Reported by

Nuveen Launches Investment Trust Portfolio

Nuveen’s Dynamic Allocation 60/40 Unit Investment Trust Portfolio will seek to provide regular monthly income and capital appreciation by investing in a specially designed portfolio comprised of 60% dividend-paying stocks and 40% fixed-income exchange-traded funds (ETF).

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

Nuveen says its portfolio consultant team will focus on diversifying across low-correlated asset classes to better endure market volatility and smooth out returns, while still capturing much of the return of an all-stock portfolio.

More information about the Nuveen Dynamic Allocation 60/40 Portfolio is available by clicking here.

NEXT: Wilshire Associates Releases ESG-Weighted Index

Wilshire Associates Releases ESG-Weighted Index

Wilshire Associates has launched the OWLshares ESG-Weighted U.S. Large Cap Index. Created and owned by New Millennium Macro and calculated by Wilshire, the index is designed to provide a large U.S. market capitalization benchmark for environmental, social, and governance (ESG) investing.

It leverages proprietary OWL ESG scores to weight the performance of a group of approximately 500 U.S. large market capitalization companies, diversified by sector. The proprietary methodology over-weights companies with higher OWL ESG scores and underweights those with lower scores.

“Wilshire Analytics is proud to help bring to market yet another Powered by Wilshire index offering, this time from best-of-breed ESG analytics provider, OWLshares,” says Robert J. Waid, managing director at Wilshire Associates. “Wilshire’s calculation and analytical expertise combined with OWLshares’ growing suite of innovative, proprietary systematic indexes demonstrates the value of a Powered by Wilshire approach which can help fuel new client-driven investment benchmark strategy ideas and bring them to market quickly.”

«