Investment Products and Services Launches

Wilshire launches VETS Index; Betterment sprouts SRI option for participants; and Deutsche launches Liquid Real Assets CIT.

Wilshire Launches VETS Index

Wilshire Associates has launched the Military Times Best for VETS Index. It’s designed to measure the performance of public companies most supportive of military veterans, service members and their families as identified by the Military Times Best for Vets: Employer annual rankings.

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First launched in 2010, the annual employer rankings survey by Military Times focuses on metrics such as company culture, policies and reservist accommodations. Results are used to compute an overall company score. The Military Times Best for VETS Index is constructed of those public companies that score highest, carry a market capitalization of $200 million or more, and have been included in the annual list for at least three consecutive years.

“Wilshire Analytics is extremely proud to help fuel this veteran-friendly Powered by Wilshire index offering from Track One,” says Michael R. Kennedy, managing director at Wilshire Associates. “Wilshire’s calculation and analytical expertise combined with Track One’s innovative rules-based approach to measuring performance of companies most supportive of military veterans demonstrates the value of a Powered by Wilshire approach, which can help clients bring new investment index strategy ideas to market quickly.”

“We have always recognized the unique skill sets and mission critical mindset that our military veterans bring to the workplace,” says Joseph Gelin, vice president at Track One. “The Military Times Best for VETS Index now demonstrates the measurable benefit that these organizations reap. We consider the Military Times to be the most well-respected publication within the veteran community, and are thrilled to be aligning with them and with Wilshire.”

For more information about the Military Times Best for VETS Index, visit wilshire.com.  

NEXT: Betterment Sprouts SRI Option for Participants

Betterment Sprouts SRI Option for Participants

Betterment for Business has launched its first socially responsible investing (SRI) portfolio option for its clients’ 401(k) participants.

The firm developed its SRI portfolio by analyzing low-cost SRI funds available to 401(k) plans, while searching for products that could replace components of its core strategy without disrupting the diversification or cost of the overall portfolio.

The portfolio is designed to give participants the opportunity to invest using an approach that reduces exposure to companies that are deemed to have a negative social impact. These include companies that profit from poor labor standards or environmental devastation. Instead, the portfolio increases exposure to companies that are deemed to have a positive social impact such as those that foster inclusive workplaces or commit to environmentally-sustainable practices.

The firm says its SRI portfolio reflects a 44% improvement to social responsibility scores for U.S. large-cap stock holdings, when compared to its core portfolio. Other asset classes, such as value, small-cap, and international stocks and bonds are not replaced with an SRI alternative due to the current state of available SRI products.

Betterment notes that it developed its SRI portfolio in response to the lack of such options in the 401(k) space in light of increasing demand for investment options that reflect participants’ values.

“The SRI portfolio is designed to maintain our fundamental advice for a low-cost, diversified investment strategy with tax optimization, while helping socially conscious participants make sure their investments reflect their personal values,” Betterment said in a statement.

NEXT: Deutsche Launches Liquid Real Assets CIT

Deutsche Launches Liquid Real Assets CIT 

Deutsche Asset Management’s (Deutsche AM) Alternatives has released the Deutsche Real Assets Collective Investment Trust Fund for certain retirement plan investors.

The fund is designed to give eligible investors exposure to a variety of liquid real assets including global REITs, listed infrastructure, commodity futures, natural resource equities and Treasury Inflation-Protected Securities.

“The new strategy gives investors efficient access to a breadth of liquid real assets as a tool to diversify their existing allocations and complement their exposure from a risk perspective,” says John Vojticek, CIO and head of Liquid Real Assets. “In today’s economic environment, defined benefit and defined contribution plans are looking for cost-effective, highly liquid investment opportunities. The Deutsche Real Assets Collective Investment Trust Fund is managed holistically across all liquid real assets while utilizing our best ideas and expertise in the underlying sectors.”

The Liquid Real Assets group’s investment approach focuses on active stock selection with a top-down global overlay of strategic allocation and risk management.

Sears Holdings Faces Stock Drop Lawsuit

The lawsuit alleges that even if the plan required that Sears Stock be offered, the plan’s fiduciaries were obligated by law to disregard that directive once it became clear company stock was no longer a prudent investment for the plan.

A participant in the Sears Holdings Savings Plan has filed a proposed Employee Retirement Income Security Act (ERISA) class action lawsuit alleging Sears continued to hold company stock in its retirement plan when it was no longer prudent to do so.

According to the complaint, Sears Holdings Corporation has not had a profitable year since 2011, and has not had a profitable quarter from business operations since 2010. Sears has a net loss attributable to shareholders of $10.196 billion since year-end 2010. The complaint contends Sears faces inevitable bankruptcy.

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“This case is about the Defendants’ abject failure, as Plan fiduciaries, to protect the interests of the Participants in violation of Defendants’ legal obligations under ERISA, including ignoring the excessive risk imposed on Participants by the rise in the debt-equity ratio of Sears, and other objective factors that imposed risks to the Fund by Defendants’ actions and inactions,” the lawsuit says.

It alleges that even if the plan purportedly required that Sears Stock be offered, the plan’s fiduciaries were obligated by law to disregard that directive once it became clear company stock was no longer a prudent investment for the plan.

“The thrust of the plaintiff’s allegations under Counts I (breach of ERISA’s duty of prudence) and II (breach of ERISA’s duty of loyalty) is that defendants allowed the investment of the plan’s assets in Sears Stock throughout the class period (July 14, 2014, to the present) even after they knew or should have known, through publicly available information, that Sears was in extremely poor financial condition and faced equally poor prospects indicating that it had experienced a sea-change in its risk profile and its prospects, making it an imprudent retirement plan investment vehicle.”

The complaint says defendants were empowered and obliged by ERISA to remove Sears Stock from the plan, yet they failed to do so, or to act in any way to protect the interests of the plan or its participants, until it was too late to make any material difference, in violation of ERISA. “Freezing purchases of the Fund at year end 2016 was too little, too late, to protect a great deal of Participants’ retirement savings,” the lawsuit says.

NEXT: What Sears should have done

The lawsuit says the Sears Stock price collapse of more than 80% during the Class Period, which devastated the plan’s assets, could have and would have been avoided in whole or in part by defendants complying with their ERISA fiduciary duties. Defendants could have taken certain actions based on the publicly known information alone such as, and not limited to: investigating whether Sears Stock was a prudent retirement investment; retaining outside advisers to consult them or to act as fiduciaries; seeking guidance from governmental agencies (such as the Department of Labor or Securities and Exchange Commission); resigning as fiduciaries of the plan; stopping or limiting additional purchases of Sears Stock by the plan; utilizing the fund’s unitization such that it was only primarily invested in Sears Stock; and/or by divesting the Sears Stock held by the plan.

To the extent the defendants wanted to take action based on non-publicly disclosed information that they were privy to, according to the complaint, the following alternative options were available to defendants “and (a) could have been done without violating securities laws or any other laws, (b) should have been done to fulfill Defendants’ fiduciary obligations under ERISA, and (c) would not have been more likely to harm the Plan than to help it.”

First, according to the lawsuit, defendants could have and should have directed that all company and participant contributions to the Company Stock fund be held in cash rather than be used to purchase Sears Stock. The refusal to purchase Company Stock for the Company Stock fund is not a “transaction” within the meaning of insider trading prohibitions, the complaint notes. This action would not have required any independent disclosures that could have had a materially adverse effect on Sears Stock’s price.

Alternatively, the complaint suggests defendants should have closed the fund itself to further contributions and directed that contributions be diverted from the fund into other (prudent) investment options based upon participants’ instructions or, if there were no such instructions, the plan’s default investment option. A further alternative available to defendants was to utilize the fund’s unitization so that participants were less exposed to Sears Stock.

“Because Defendants could and should have concluded that Sears Stock was an imprudent retirement savings vehicle based solely upon public information, no disclosure was required before conducting an orderly liquidation of the Plan’s holdings,” the lawsuit contends.

The suit asks Sears to make good to such plan any losses to the plan and for the court to impose “such other equitable or remedial relief as the court may deem appropriate.”

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