Administration July 14, 2011

Pension Funding Ticks Down in Q2

July 14, 2011 (PLANSPONSOR.com) - During Q2 2011, the funded status of the model plan analyzed by Sibson and Segal Advisors declined from 87% to 86%.
Reported by

The firms’ Prism publication says this was driven by both the decline in interest rates and the modest growth in assets.  

The report said overall, domestic equities posted slightly negative returns while international equities ended positive in Q2 2011. This marked the first negative results for domestic equities since Q2 2010, while international equities posted gains for the fourth consecutive quarter. In a reversal from the prior quarter, large-capitalization stocks outperformed small-capitalization stocks. Within international equities, emerging markets underperformed developed markets for the second consecutive quarter. Global bonds, as measured by the Citigroup World Government Bond Index (WGBI), experienced strong results, posting a 3.3% gain for the quarter.  

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According to the report, the modest decrease in the yield curve level during 2011 resulted in a decrease in the model plan’s effective interest rate of about six basis points, which led to a very slight increase in liabilities. The modest changes to the shape of the yield curve (especially at the very short end) and the decrease in rates will have different effects for plans with different maturities – with less mature plans (higher liability durations) experiencing a slightly less pronounced increase (and possibly even a decrease) in liabilities, and more mature plans experiencing a liability increase slightly more than a typical plan.  

Prism examines the effect of changes in the assets and liabilities of a model defined benefit plan on its funded ratio over the four most recent quarters, viewing such changes through a marked-to-market lens.
Products July 14, 2011

ProShares Launches Hedge Replication ETF

July 14, 2011 (PLANSPONSOR.com) - Alternative exchange traded funds (ETFs) provider ProShares has announced the release of an ETF that seeks to provide hedge fund benefits without the same investment challenges.
Reported by

The ProShares Hedge Replication ETF is listed on NYSE Arca under the ticker symbol HDG.

According to ProShares, the fund aims to provide the risk/return characteristics of a broad universe of hedge funds without many of the challenges of hedge fund investing, such as illiquidity, limited transparency and high fees. The fund’s benchmark is based on Merrill Lynch’s hedge fund replication model.

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“Many portfolios could benefit from the risk/return characteristics of hedge funds, but investors often either can’t or don’t invest in hedge funds because of a variety of challenges,” said Michael L. Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares’ investment adviser, in the announcement.  “We are pleased to offer an ETF that addresses challenges of hedge fund investing and may be, for many investors, an attractive alternative to hedge funds.”

 

-Sara Kelly 

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