Products January 9, 2020

Investment Product and Service Launches

CUNA Mutual adds Stadion managed account service to platform; MSCI creates new fixed income indexes; Transamerica decreases fees on two high yield bonds; and more.

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Art by Jackson Epstein

CUNA Mutual Adds Stadion Managed Account Service to Platform

CUNA Mutual Retirement Solutions has added Stadion Money Management’s StoryLine managed account service to its retirement recordkeeping platform. The service will provide CUNA Mutual Retirement Solutions’ adviser partners, plan sponsors and third-party administrators (TPAs) additional investment flexibility while helping plan participants save for their future. 

StoryLine is a professionally managed investment service that provides customization at the plan level based on employee demographics and a personalized investment allocation tailored to participants based on their individual characteristics and risk tolerance. StoryLine offers participants an easy-to-use experience, including enrollment support and ongoing communications.

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“More plan sponsors today are offering managed account services to help participants achieve retirement readiness, and we are pleased to add StoryLine to our firm’s offering,” says Paul Chong, Senior Vice President of CUNA Mutual Retirement Solutions. “Our mission is to help people achieve retirement on their terms. This new service allows us to create a customer experience that differentiates us in the market, while delivering innovative solutions to help participants make the right investment decisions for their personal situation,”

MSCI Creates New Fixed Income Indexes

MSCI Inc. has launched the MSCI Fixed Income ESG Indexes and the MSCI Fixed Income Factor Indexes.

Jana Haines, head of Index Products, Americas, at MSCI comments, “We are pleased to bring next generation fixed income indexes to market. Investors are increasingly demanding ESG integration across all asset classes and looking to Factors—such as Carry, Quality, Value, Size and Risk—to more precisely define how they can better identify, measure and manage risk and return in their portfolios.”

The MSCI Fixed Income ESG Indexes and Factor Indexes include: Issuance Weighted—MSCI USD Investment Grade Corporate Bond Index; ESG—MSCI USD IG ESG Universal Corporate Bond Index and MSCI USD IG ESG Leaders Corporate Bond Index; and multiple Factor indexes including MSCI USD IG Carry High Exposure Corporate Bond Index; MSCI USD IG Low Risk High Exposure Corporate Bond Index; MSCI USD IG Quality High Exposure Corporate Bond Index; and more.

Transamerica Decreases Fees on Two High Yield Bonds

Transamerica has reduced fees on two of its bond funds, effective as of January 6. The reductions on the Transamerica High Yield Bond fund and Transamerica Aegon High Yield Bond VP total up to 12 basis points annually and impact $1.8 billion in combined assets.

“These latest fee reductions can help our mutual fund, variable annuity, and retirement investors put more of their money to work as they plan for the future,” says Tom Wald, chief investment officer for Transamerica Asset Management, Inc. “We’re pleased that these new fee structures can help investors best achieve their goals.”

The funds and share classes experiencing the fee reduction include: Transamerica High Yield Bond – Class A (IHIYX); Transamerica High Yield Bond – Class C (INCLX); Transamerica High Yield Bond – Class I (TDHIX); Transamerica High Yield Bond – Class R (TAHRX); Transamerica High Yield Bond – Class R4 (TAHFX); Transamerica High Yield Bond – Class R6 (TAHBX); Transamerica High Yield Bond – Class I3 (TAHTX); Transamerica Aegon High Yield Bond VP – Initial Class; and Transamerica Aegon High Yield Bond VP – Service Class.

Pacific Global Adds Floating-Rate Loan ETF

Pacific Global ETFs, one of Pacific Life’s family of funds, announced the addition of a floating-rate loan exchanged-traded fund (ETF) to its lineup.

Pacific Global Senior Loan ETF (NYSE: FLRT) is an actively managed fund designed to produce income from floating-rate loans (also known as senior loans) and floating-rate debt securities.

“We believe that passive management is an inefficient strategy for floating-rate loan funds,” says Anthony J. Dufault, managing director of Pacific Global ETFs. “Our experienced team of fixed-income professionals seeks to add value by carefully selecting highly liquid, floating-rate loans of non-investment-grade companies.”

Pacific Global ETFs recently completed the adoption of AdvisorShares’ Pacific Asset Enhanced Floating Rate ETF. Shareholders voted to approve its merger and reorganization into Pacific Global Senior Loan ETF at the end of 2019. The fund’s existing assets and its nearly four-year track record have transitioned to Pacific Global Senior Loan ETF. Pacific Asset Management, which manages over $4.5 billion in floating-rate loan strategies, continues to manage the ETF as its sub-advisor.

For more information about Pacific Global ETFs, visit www.pacificglobaletfs.com.

Benefits January 9, 2020

Longer-Term HSA Holders Maximize Benefits for the Future

An analysis from EBRI shows familiarity breeds better usage.

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The longer an employee has a health savings account (HSA), the more likely he is to invest and save funds in the account for future expenses, according to an analysis from the Employee Benefit Research Institute (EBRI).

On average, EBRI says, account holders appear to be using HSAs as specialized checking accounts rather than investment accounts, but this behavior appears to change the longer an HSA owner holds an account. In other words, EBRI’s longitudinal analysis shows that the more owners have experience with HSAs, the greater the likelihood their usage becomes more investment-like.

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The analysis found that accounts open for one year had an average $1,018 year-end account balance, while accounts open for 10 years had an average $7,589 year-end account balance. This demonstrates that the propensity to save in an HSA increases over time, EBRI says.

In 2018, individual contributions averaged $1,166 among those accounts open for one year but averaged $3,355 among those accounts open for 10 years. In addition, 2% of accounts open for one year had investments other than cash, compared with 10% among those open for 10 years.

EBRI notes it is possible that rules requiring minimum balances before investing may have prevented owners of relatively new accounts from doing so, as the accounts would not have reached the minimum balance requirement. Regardless, over time, account owners appear to see the value in investing their HSA balances.

“Such analysis can help not only plan sponsors but providers and policymakers better understand strategies that can help improve employee financial wellness,” EBRI says.

Educating employees about health savings accounts can help them maximize their benefit. “The best time to engage with employees and educate them about health savings accounts is after open enrollment,” says Steve Neeleman, founder and vice chairman of HealthEquity in Draper, Utah.

“Start with three basic messages: HSAs are not use it or lose it accounts, they can be invested and employees can increase how much they put into the account during the year. Light bulbs will go on,” Neeleman says.

Devenir has reported that HSA investment accounts have an average total balance of $15,982—six times larger than a non-investment holder’s average account balance.

In order to educate participants about HSAs, plan sponsors must understand the accounts themselves. And to get employees thinking about HSAs as long-term savings vehicles, Sara Caddy, benefits manager at Dimensional Fund Advisors, says employers should highlight what the ‘S’ stands for—“savings,” versus “spending” in flexible spending accounts (FSAs). She also recommended employers reiterate to employees that the primary expense that increases after retirement is health care. Remind employees that HSA assets left in the account will be rolled over from year-to-year.

A report from Cerulli Associates suggests that pairing HSA and defined contribution (DC) plan communication and administration and modernizing HSA investment menus can help to position HSAs as retirement savings vehicles.

“As individuals become more familiar with HSAs, they are more likely to take advantage of the benefits of the accounts,” says Paul Fronstin, director of EBRI’s Health Research and Education Program.

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