Investing October 27, 2000

Investors Pulling Back From Mutual Funds

October 27, 2000 (PLANSPONSOR.com) - Mutual funds could see more money withdrawn than invested for the first time since the Russian debt default in August 1998, according to new projections.
Reported by

TrimTabs.com Investment Research expects outflows of $3.5 billion for October in the midst of turbulent markets, according to Bloomberg.

The net outflows would be the first since the $11.7 billion that “fled” in August 1998 when Russia defaulted on its debt. Net outflows through October 24 have totaled $2.6 billion.

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Most of that outflow is currently attributed to international funds, some $2.2 billion, although the category accounts for just 14% of assets.

TrimTabs projects that technology fund outflows will total $246 million, the first net outflow since February 1999 for the sector. Bonds are expected to see a net $3.2 billion flow out for the full month.

Apparently bucking the current are aggressive growth funds, with an expected net inflow of $3.1 billion for the month.

Benefits October 26, 2000

Plan Sponsors Expand Options, Tighten Focus To Stay Competitive

October 26, 2000 (PLANSPONSOR.com) - Plan sponsors are more likely to have an investment policy, conduct annual plan reviews and condition fees on performance, according to a new survey.
Reported by

The 2000 401(k) Plan Benchmarking Survey by Deloitte & Touche also found that the average number of investment options among responding plans was 10, and that plan sponsors continue to pay the majority of 401(k) plan related fees.  Of survey respondents:

  • 69% allow employees to participate within 6 months of employment and 34% provide for immediate eligibility
  • Over three-fourths (78%) provide some form of employer match

“The results of this year’s survey clearly indicate that companies are responding to the tight labor market and offering enhanced benefits such as accelerated eligibility and greater choice in investment options,” said Patricia Jackson, Deloitte & Touche principal and survey director.

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Tighter Focus

Over half (60%) of employers now have written investment policies, up 10% from a year ago.  A vast majority (86%) conduct plan reviews at least once a year.  The survey also found that an increasing number of sponsors are requiring some form of fee guarantees based on:

  • reporting
  • overall quality of service
  • plan participation.

A substantial number (84%) have Internet access for participants, and 88% of those allow transactional activity via the Internet.  More than two-thirds (68%) are using the Internet to communicate general plan information, but less than half (44%) use the Web for employee education – and just 18% are currently offering investment advice via that medium.

Forty-one percent provide paperless loans, which provide participants with a loan check without the usual plethora of paperwork.

The survey was based on data collected from 452 human resource and employee benefits executives nationwide, with an average of 2,000 employees.

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