Net
new flows to stock and bond funds totaled $28 billion in April, according to
Strategic Insight, an Asset International company.
Net
investment to equity funds totaled $14.4 billion during the month, driven by a
$43.4 billion inflow to international equity. U.S. equity funds shed $29.1
billion during the month with outflows originating from both active mutual
funds and index ETFs alike.
International equity has been a top draw for investors the past two months, according to Strategic Insight data.
Taxable bond funds attracted $12.7 billion during April on $4.3 billion of inflows to global bond products. Money market fund net redemptions totaled $77.8 billion for
the month.
Average
one-month April fund returns for international equity strategies were strong at
3.6%, Strategic Insight reports. U.S. equity and taxable bond fund average
returns were modest in April at 0.4% and 0.2%, respectively. Tax-free bond fund
returns were lower on average, declining by 0.5%.
More information
about Strategic Insight is at www.sionline.com.
The
American Benefits Council submitted a very extensive written comment to the
Department of Treasury and the Internal Revenue Service (IRS) in response to regulators’ solicitation of input about possible approaches for implementing the 40% excise tax on “high cost”
employer-sponsored health coverage
mandated by the Patient Protection and Affordable Care Act (ACA).
“The
health care law was expressly designed to build upon the employer-sponsored
benefits system, which provides great value to American workers and families.
But this tax would wreak havoc on the employer coverage that over 150 million
Americans have and want to keep,” said American Benefits Council President
James A. Klein.
“Research
estimates that, in 2018, more than one-third of employer-sponsored plans will
trigger the tax unless the value of those plans is significantly reduced. But the greater long-term concern is that
because of the way the cost thresholds that trigger the tax are indexed,
eventually even plans that only meet the minimum value required by the law will
cross the thresholds,” Klein added.
According
to the letter, even with changes, many employers remain concerned that they
will incur the so-called “Cadillac tax” in 2018 or shortly thereafter. Of Council
members surveyed, 49% agreed with the statement “[a]t least one of our plans
will trigger the tax by 2018 or shortly thereafter, even though we are making
changes to avoid the tax.”
Reasons they may trigger the tax included:
employees
located in geographic areas with higher health care costs;
a workforce that is older than the average
workforce and thus has relatively higher costs;
employees that are
generally higher-cost individuals (for example, those with a high prevalence of
chronic conditions or other factors resulting in relatively higher claims
experience).
Only
45% of respondents who anticipate triggering the tax indicated that they will
do so in part because their plans are “very generous in terms of covered
services” and impose minimal employee cost-sharing.
The
Council is recommending that certain coverage be excluded from the definition
of “applicable employer-sponsored coverage” for purposes of determining whether
an employer’s health plan is a “high-cost” plan.
The
Council says it supports legislation that will repeal the tax, but in the meantime, employers will have to prepare for it. It asked regulators
to issue safe harbor estimates for use by employers since employers will need
timely information regarding the dollar limits that will trigger the tax that
will apply in 2018.