Investing February 12, 2008

Median DB Plan Loses Ground in Q4

February 12, 2008 (PLANSPONSOR.com) - The median plan for the 583 corporate, foundation, endowment, public, Taft-Hartley and healthcare funds that make up the BNY Mellon U.S. Master Trust Universe posted a combined loss of 0.55% for the fourth quarter of 2007, the first negative quarterly return since the second quarter of 2006.
Reported by

Despite the volatility, year-end performance for the median plan was 8.28%, marking the fifth consecutive year of positive returns, according to a press release.   The BNY Mellon U.S. Master Trust Universe represents a combined market value of $1.8 trillion, with an average plan size of $3.0 billion.

Of the plans in the universe 65% posted negative results with only 54% matching or outperforming the universe’s composite benchmark (Russell 3000® Index 50%, Lehman Brothers Aggregate 40%, MSCI All Country World Index ex US 10%), which lost 0.62% for the quarter.  

Get more!  Sign up for PLANSPONSOR newsletters.

U.S. Fixed Income led all asset classes for the quarter with a median return of 2.65%, lagging the Lehman Brothers Aggregate return of 3.00%, according to a press release.   Non-U.S. Fixed Income generated a median result of 1.99%, while U.S. Equities slipped 3.30%.   Non-U.S. Equities 0.80% loss underperformed the MSCI All Country World Index ex US return of -0.62%.  

Endowments on Top

Endowments were the top performing plan-type for the fourth quarter with a 0.06% median return, followed by healthcare, foundations, Taft-Hartley, corporate and public plans.   Endowments’ lower allocation to the U.S. equity market was cited as one of the reasons for the relative performance, along with their higher allocation to alternatives.

The average asset allocation in the U.S. Master Trust Universe for the fourth quarter was:

  • 35% – U.S. Equity
  • 25% – U.S. Fixed Income
  • 19% – Non-U.S. Equity
  • 1% – Non-U.S. Fixed Income
  • 8% – Alternative Investments
  • 3% – Real Estate
  • 1% – Cash
  • 8% – Other (Private Equity, Oil, Gas, etc.)
Benefits February 11, 2008

Gen-Xers Show Traditional Financial Values, but Have too Much Debt

February 11, 2008 (PLANSPONSOR.com) - The Schwab Gen X Money Mindsets Study reveals that many Gen-Xers are not characterized by skeptical attitudes, and instead favor a more traditional outlook on life and financial aspirations.
Reported by

In a press release, Schwab said Gen-Xers have often been labeled as “slackers” and were assumed to have rejected the traditional working-class lifestyle, but the study found almost two in three (64%) respondents say they are focused on attaining the American Dream of family, home ownership, and financial security. Almost two in five (39%) indicate they would like to attain the lifestyle enjoyed by the financially successful people who surround them.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

Two-thirds (66%) of respondents admit to thinking about their finances on a daily basis, and nearly half (46%) also worry about the finances of their parents and siblings.

The problem is Gen Xers are saddled with debt. According to the release, almost 45% say they have too much debt to even think about saving or investing, and more than a third (35%) think they will be in debt for the rest of their lives. Forty-seven percent report they live on a very strict budget with nothing left over to save. When asked if they are more proactive in saving for a vacation or retirement, 43% chose vacation.

Additionally many Gen-Xers lack trust in financial firms. More than half (51%) think that investment firms do not care about people like them – those who do not have a lot of money – and 46% feel that by turning to firms and advisers they might end up spending more money than they make.

The study of more than 5,000 Americans aged 25-40 found that younger investors generally fall into six distinct categories based on their mindsets and attitudes toward money:

  • Paycheck to Paychecks - Representing 25% of Gen-Xers, members of this predominately female group are extremely stressed about their personal and professional lives. They are less confident than any other group about having a bright future, and are twice as likely to be unsettled and pessimistic about their financial situations.
  • Spend Now, Pay Laters - Seventeen percent of Gen-Xers fall into this category of predominately city dwellers that tend to be optimistic, yet somewhat unrealistic about their futures. Overwhelmingly male (77%), this group is incurring significant debt, and believes Social Security will be there for them when they retire.
  • Confident and Risk-Tolerants - Representing 15% of the overall Gen-X population, members of this group have high incomes, active lifestyles, and high levels of engagement in their financial future. They are more likely to be married, and believe that by taking risks they can reach lofty financial and lifestyle goals.
  • No Money, No Worries - This group represents 15% of the Gen-X population. They are at the bottom of the earnings spectrum yet are very optimistic about life. They are more likely to be single, consider investing risky, and have the fewest number of credit cards. This group also has very little trust in financial firms or advisers.
  • Cautious Savers - Approximately 14% of the Gen-X population, this group tends to be financially conservative and concerned about money, highly educated and financially secure, yet is late to adopt new products. They are also more likely focused on home and family than they are on having active social lives.
  • Overwhelmed but Optimistics - Predominately female, these Gen-Xers have significant debt, adjustable rate mortgages, and high rates of financially-induced irritability or anxiety. Despite this, they manage to stay positive about their futures. This group represents 13% of the Gen-X population.

The Gen X Money Mindsets Study incorporates more than 2,000 online and face-to-face interviews nationally and an additional 3,000 interviews in America's largest cities.

«