Investing February 12, 2013

Morningstar Sees Record Fund Inflows in January

February 12, 2013 (PLANSPONSOR.com) – Investors added $86.5 billion to long-term open-end mutual funds in January.
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Data from Morningstar shows 72 of 93 open-end categories recorded inflows. Combined with inflows of $28.6 billion for exchange-traded funds (ETFs), it was by far the largest one-month inflow on record. All asset classes and each of the top 10 open-end fund providers saw long-term fund inflows.   

Continuing a trend that has persisted for more than four years, and demonstrating that investors have not abandoned fixed income, the intermediate-term bond category had the greatest inflows in January with $10.5 billion. Taxable-bond funds led all asset classes with inflows of $31.0 billion in January, followed by international-stock funds, which took in $18.4 billion during the month.   

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“Market observers have been waiting for a sign that the multi-year trend of investors buying fixed income while selling U.S. stocks would reverse in a so-called ‘great rotation,'” said Mike Rawson, fund analyst on Morningstar’s passive funds research team. “Inflows of $15.5 billion for U.S.-stock funds, the largest monthly intake since 2004, and the first month of inflows in the last 23 for active U.S.-stock funds, support this development. However, U.S.-stock funds experienced slower organic growth than any other major asset class in January, and seasonal and one-time factors such as lump-sum contributions to retirement accounts and acceleration of dividend payments indicate that claims of a paradigm shift in investor behavior may be premature.”   

Vanguard topped all fund families in January with overall inflows of $17.6 billion, 87% of which flowed to the firm’s passive lineup. Vanguard funds swept the top three spots for fund-level inflows, led by Vanguard Total Bond Market’s inflows of $4.3 billion. American Funds saw its first monthly inflow since June 2009.   

The complete report is at http://www.global.morningstar.com/janflows13.
Benefits February 12, 2013

Employers Consider Adjustments for PPACA Costs

February 12, 2013 (PLANSPONSOR.com) – A LIMRA survey found more than half of U.S. employers have increased or plan to increase deductibles, co-pays or employee contributions to cover the cost of their medical plans.
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The majority of U.S. employers (52%) said the Patient Protection and Affordable Care Act (PPACA) will negatively impact their businesses, and only one in 10 employers feel their employees understand what the full impact of the health care reform will have on their businesses. In addition, almost one-third of employers feel the health care reform law will negatively influence their employees’ ability to afford health care over the next three to five years.  

U.S. employers are considering eliminating non-medical benefits as a way to defray the increasing costs of medical care. Thirty-five percent of employers said they would consider eliminating accident insurance within three to five years due to health care reform, and 33% would consider eliminating critical illness insurance.  

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Twenty-eight percent of employers, each, cited accidental death and dismemberment insurance and long-term disability insurance as benefits they would consider eliminating. Twenty-seven percent chose vision care, 26% chose dental insurance, and one-quarter, each, said they would consider eliminating short-term disability insurance and life insurance.

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