Investing February 14, 2011

US ETF Assets up to $1T

February 14, 2011 (PLANSPONSOR.com) – Having broken the $1 trillion milestone in December, many questioned whether inflows into U.S. ETFs had become overheated, according to Morningstar.
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Though U.S. ETF net assets under management were up slightly month over month, settling at $1.02 trillion by the end of January, flows tempered their pace. Total net flows fell to just over $11 billion from $18 billion during the first month of the year.

Although U.S. stock ETFs drove inflows in January for ETFs overall, inflows for the asset class were down nearly 50% month over month, according to Morningstar data. U.S. stock ETFs saw inflows of $9.9 billion in January, compared to $17.2 billion in December.

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Commodities ETFs lost $1.7 billion in January to lead outflows among the ETF asset classes, and precious metals ETFs were responsible for the majority of these redemptions. However, several futures-based broad agricultural commodities funds saw inflows.

After outflows in December, taxable-bond ETFs took in approximately $2.9 billion in January to mark the month’s second-highest inflows by asset class, behind U.S. stock ETFs.

International-stock ETFs, which had the second-highest inflows in 2010 among the ETF asset classes, saw modest outflows of $491 million in January.

The Morningstar data is at http://corporate.morningstar.com/us/documents/FundFlows/FundFlowsFeb2011.pdf.

Compliance February 14, 2011

White House Proposes Risk-Based PBGC Premiums

February 14, 2011 (PLANSPONSOR.com) – The White House’s latest budget blueprint released Monday calls for pension insurance premiums charged by the Pension Benefit Guaranty Corp. (PBGC) to go up by $16 billion over ten years.
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The Wall Street Journal reports that in a significant policy shift, would levy higher premiums on the riskiest companies. Rather than seeking a simple increase, the administration is asking Congress to give the PBGC authority to fashion a new approach in which premiums would be linked to the financial health of the employer sponsoring the underlying pension plan, the Journal reported.

Under the Obama proposal, the changes wouldn’t take effect for two years-at the earliest-to give the agency time to devise the new system and go through a formal rule-writing process, the Journal said.

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“This proposal is both good government and better for business,” PBGC Director Joshua Gotbaum told the Journal. “It protects retirement security while encouraging and rewarding responsible business behavior.”

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