Investing January 25, 2002

ETFs Jump 5.2% in December

January 25, 2002 (PLANSPONSOR.com) - The combined assets of the nation's exchange-traded funds (ETFs) were $82.99 billion at the end of December 2001, up 5.2% from the end of November, according to the Investment Company Institute (ICI).
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Net issuance of ETF shares increased to $3.6 billion in December, up 5.9% from $2.52 billion the previous month. Gross issuance skyrocketed 51% to $8.4 billion in December, up from $5.5 billion in November, while redemptions increased to $4.82 billion from $3.29 billion.  

By Sector

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Broad-based domestic equity ETF assets jumped to $71.77 billion at the end of December, compared to the $68.52 at the end of November, while domestic sector funds were up slightly to $8.2 billion from $7.74 billion a month earlier. Global funds were up to $3 billion from $2.58 billion over the period.

The ICI report includes 35 broad-based domestic equity ETFs, 33 domestic sector focused funds, and 34 global ETFs.

Statistics contained in the monthly ETF report have been obtained from information provided to ICI by ETFs. Trust-issued receipts, such as Holding Company Depository Receipts (HOLDRS), are not included in the report because registered investment companies do not issue them.

Benefits January 24, 2002

Nationwide Offers Public Plans Access to Morningstar Advice

January 24, 2002 (PLANSPONSOR.com) - Sponsors of public sector retirement plans, who are clients of Nationwide Retirement Solutions, will be able to offer participants an online education and advice product starting this summer.
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That’s because of an agreement announced Thursday between Nationwide Retirement Solutions and Morningstar Associates, LLC to make available the Morningstar ClearFuture advice program to 8,200 public sector plans covering 1.5 million participants, the companies said.

Under the agreement, participant access to Morningstar ClearFuture will be free. John Rekenthaler, Morningstar president of online advice, told PLANSPONSOR.com that the basic product gives general asset allocation information down to percentages to be invested in different asset classes.

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Participants can get an enhanced version of Morningstar ClearFuture for an additional charge to be negotiated on a plan-specific basis. Rekenthaler said the enhanced version provides more precise allocations to specific recommended funds in the person’s plan.

Nationwide will couple Morningstar ClearFuture with new educational materials and customer service support.

Under Thursday’s deal, Nationwide will pay Morningstar a flat access fee so participants don’t have to pay for the basic product. Rekenthaler and Karen Eisenbach, senior vice president for marketing and education for Nationwide Retirement Solutions, declined to disclose the fee amount in a PLANSPONSOR.com interview.

ClearFuture also provides participants with access to Morningstar’s:

  • research Lab, which reports on specific investment options and quarterly reports to provide more in-depth investment information
  • the Learning Station, which features articles and interactive tools.

Eisenbach said there were few differences between an advice product for a private plan and one for a public plan.

“When you look at the public sector, there isn’t a difference in tools, there is a difference in access,” she told PLANSPONSOR.com . “There are probably fewer than 50 (public funds) that have offered advice in this market to this level.”

But Eisenbach isn’t convinced that the usage rate is really that low. She said the Morningstar partnership may help both companies demonstrate how many participants sign up for the program because the companies can precisely measure usage rates.

For example, if a participant bails out before completing the interactive portion, the program measures how far they got.

“Everybody says there’s a 20% usage rate (of advice products), but it is not widespread enough to get a real sense,” Eisenbach said.

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