Products June 20, 2016

Fidelity Introduces New Institutional Premium Shares

Alongside the introduction of three new funds, Fidelity has unveiled an “institutional premium” share class.    

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Fidelity Investments announced a series of enhancements to its line-up of index mutual funds, including the launch of three new equity funds, replacing the Spartan brand name, and expanding the availability of institutional share classes.

With the expansion, the firm now offers 19 equity, fixed-income and hybrid index mutual funds, 13 Fidelity Freedom Index Funds, and 12 passive ETFs.

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Colby Penzone, senior vice president for Fidelity’s Investment Product Group, says the enhancements build on Fidelity’s ongoing commitment to “provide access to a wide-array of high-quality, low-cost index funds, as well as managed solutions.”

The three new funds are the Fidelity Large Cap Growth Index Fund, the Fidelity Large Cap Value Index Fund, and the Fidelity Total International Index Fund. Each new fund is offered with multiple share classes “at very competitive prices.” These include both institutional ($5 million minimum investment, generally) and “institutional premium” ($100 million and up) share classes.  

“Each fund will attempt to replicate the performance of its respective index, before expenses, by normally investing at least 80% of its assets in securities included in the index,” the firm explains.

Additional details include the following:

  • Fidelity Large Cap Growth Index Fund seeks to provide investment results that correspond to the total return of stocks of large capitalization U.S. companies. The fund will normally invest at least 80% of its assets in securities included in the Russell 1000 Growth Index.
  • Fidelity Large Cap Value Index Fund seeks to provide investment results that correspond to the total return of stocks of large capitalization U.S. companies. The fund will normally invest at least 80% of its assets in securities included in the Russell 1000 Value Index.
  • Fidelity Total International Index Fund seeks to provide investment results that correspond to the total return of foreign developed and emerging stock markets. The fund will normally invest at least 80% of its assets in securities included in the MSCI ACWI (All Country World Index) ex USA Investable Market Index (IMI) and in depository receipts representing securities included in the index.

Additionally, Fidelity has replaced the “Spartan” brand within its line-up of index mutual funds with the Fidelity name. For example, the Spartan 500 Index Fund is now named the Fidelity 500 Index Fund. “This move creates consistency in branding across Fidelity’s diverse product line,” according to the firm. “As part of this effort, Fidelity has also renamed two of its four underlying index fund share classes. The Fidelity Advantage Class has been renamed ‘Premium Class’ and the Fidelity Advantage Institutional Class has been renamed ‘Institutional Premium Class.’”

Finally, Fidelity also expanded the availability of its index mutual fund line-up. Effective immediately, the company’s Institutional share classes (Institutional and Institutional Premium) are available to investors on and off the Fidelity platform, both retail and intermediary, provided they meet eligibility requirements.

For more information about, visit www.fidelity.com. 

Benefits June 20, 2016

PSNC 2016: How the ‘Gig’ Economy Affects Employer-Sponsored Benefit Plans

With Millennials wanting more freedom and older workers wanting to stay in the workforce in some way, how will this impact employee benefits?
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The Millennial generation wants more freedom and flexibility for their careers, and older workers either don’t want to or can’t retire, and desire to stay in the workforce in some way, which is creating more freelance, part-time and independent contractor employees.

Speaking at the 2016 PLANSPONSOR National Conference in Washington, D.C., Will Hansen, SVP of Retirement at the ERISA Industry Committee (ERIC), noted that as of May 2016, 15 million workers were self-employed; at the same time, a 2014 study found 53 million workers were freelancing, and it is estimated that by 2020, 60 million workers (40%) will be contingent employees.

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As an example of what “gig” employment looks like, Hansen noted that car-sharing companies such as Uber and Lyft are leading forces. “How to manage these types of workers and provide benefits is an evolving issue. We don’t have the answers yet,” he said.

Tami Simon, global practice leader, Knowledge Resource Center, Buck Consultants, a Xerox company, noted that lower salary and benefit costs is one reason employers like short-term contracts with employees. In addition, they may have project work that doesn’t require a permanent employee and they can be “global without being global.”

Also, as for older workers, with 10,000 people turning age 65 each day, employers are experiencing a brain drain, Simon pointed out. Using freelance or consulting older employees can help them tap into knowledge.

NEXT: How ‘gig’ workers may affect benefit offerings

“How can employers create a benefit package for a workforce that is creating its own ladder?” Hansen queried. Instead of moving up in a company, there will be many lateral moves to different companies. And, Simon noted, many employers question why they should spend money on employees that will not stick around. “But, if they don’t provide benefits for these workers, the country will end up in a big mess,” she said.

“The higher the percentage of contingent workers grows, the offering of traditional benefits may become minimal,” Simon said. She speculated that perhaps these “gig” workers will unionize or use associations to create and participate in retirement plans.

Hansen noted that recent regulations address retirement savings for a gig economy. The Department of Labor (DOL) announced plans to extend opportunities for open multiple employer plans (MEPs), and also proposed guidance for state-run plans for private-sector employees.

As for health benefits, the Patient Protection and Affordable Care Act (ACA) created a public exchange for purchasing health insurance. Hansen speculated that employers may just point workers to the public exchange.

However it plays out, Simon told conference attendees to get ready for the gig economy. “Use analytics for workforce planning. Decide what employees are needed to meet corporate goals, then create a policy to comply with all laws,” she said, adding that the policy should be nimble because it is unsure what the workforce will look like from year to year.

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