Investing May 15, 2019

Investors Consider Many Factors When Choosing Mutual Funds

Finding that most households own mutual funds in employer-sponsored retirement plans, the Investment Company Institute (ICI) looked into the factors considered when selecting mutual funds.

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In 2018, 90% of mutual fund-owning households considered fees and expenses when selecting a mutual fund, according to research by the Investment Company Institute (ICI) in a new report, “What U.S. Households Consider When They Select Mutual Funds, 2018.” Nearly 40% said this information was “very important.”

More than nine in 10 mutual fund-owning households considered historical performance when making a purchase. Just over half said this information was “very important.” Additionally, 88% consider a fund’s performance compared to an index, with 36% saying this information was “very important.”

“Mutual fund investors are typically saving for retirement, education or other long-term financial goals,” says Sarah Holden, senior director of retirement and investor research at the ICI. “So, it’s no surprise that households carefully consider many factors when choosing mutual funds, making informed choices to save and invest to meet their financial goals.”

Additionally, 90% of mutual fund-owning households considered a fund’s investment objective when making a selection, with 38% saying this information was “very important.” Ninety-one percent consider a fund’s risk level of investments, with 37% saying this information was “very important.” Seventy-five percent look at a fund’s rating from a rating service, with 20% saying this information was “very important.”

ICI also looked at the channels through which investors own mutual funds. The most common, 80%, was through employer-sponsored retirement plans, but another 63% own mutual funds through outside resources.  Twenty-seven percent purchased these outside funds through a broker, 24% through a financial planner, 19% through a bank or savings institution, 10% through an insurance agent and 7% through an accountant. On the other hand, 33% make the purchase themselves directly, either from the mutual fund company or a discount broker.

The most common type of fund owned was equity funds (88%), followed by money market funds (57%), bond funds (44%) and balanced funds (36%). Total U.S. household mutual fund assets in 2018 were $15.8 trillion, with 41% of these assets in domestic equity funds, 24% in bond funds, 14% in world equity funds, 12% in money market funds and 9% in balanced funds.

Products May 15, 2019

MassMutual Launches Workplace Student Loan Repayment Program

The program is available to employers through Tuition.io, which provides two levels of support for student loan indebtedness.

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Massachusetts Mutual Life Insurance Co. (MassMutual) is introducing a new student loan repayment and management program for the workplace as part of a broader financial wellness initiative.

MassMutual is making a student loan program available to employers through Tuition.io, a platform for student loan contributions, to help workers better manage and reduce their indebtedness. The student loan program is available through MapMyFinances, MassMutual’s workplace financial and benefits planning tool, to help workers assess and balance their short- and long-term financial needs.

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The Tuition.io program provides two levels of support for student loan indebtedness, both of which help borrowers better manage their student debt, including one that allows employers to provide financial assistance to extinguish debts.

The student loan repayment option available through Tuition.io is called “Student Loan Contributions” and allows employers to make payments towards an employee’s student loan indebtedness. Employers can also choose to make payments towards student loans that parents have taken out for their children, known as Parent PLUS loans.

Additionally, the Tuition.io student loan wellness section of the portal helps borrowers manage their debt by creating a consolidated summary of all student loans for each participating employee by pulling in data from multiple loans and loan servicers. The Tuition.io platform works with every U.S. loan servicer—Including both federal and privately held loans—to generate automatic real-time updates whenever loan payments are made.

With all loan data available in one place, employees can more easily model different loan repayment options as well as determine if paying extra to certain loan providers can potentially save on the amount of interest paid in the long run. Employees can also more easily assess whether refinancing makes sense for their personal situation. The student loan wellness section of the portal can be made available to eligible employees’ family members as well to provide the same loan management tools and capabilities.

The student loan program has a cost associated with it. Tuition.io helps employers project both the program and loan repayment potential costs, and weigh them against the projected benefits.

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