Investing March 2, 2004

Schwab: SDBA Investors Still Diving Into Funds

March 2, 2004 (PLANSPONSOR.com) - In a sign that the ongoing mutual fund scandal apparently hasn't scared them away from the fund space, 401(k) retirement investors with self-directed brokerage accounts (SDBAs) did brisk business in funds and equities during the fourth quarter.
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According to the Charles Schwab Corporate Services’ fourth quarter 2003 SDBA Indicators report SDBA trading activity increased to 2.94 trades per account, the highest since the first quarter of 2001. Further, mutual funds and equities accounted for more than 95% of net asset flows for the quarter, the highest level recorded for the year.

Participants held 43% of their SDBA assets in mutual funds, up 2% from the third quarter (See  Resurgent Markets Buoy SDBA Activity ), Schwab said. Mutual funds captured more than 60% of net asset flows in the fourth quarter. Small cap stock funds led all other categories with 23% of net new assets while International funds and large-cap stock funds followed with 11.8% and 10.3%, respectively.

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“SDBA trading activity increased for the fourth straight quarter, reaching its highest level in three years,” said Jim McCool, senior vice president, Charles Schwab Corporate Services, in a Schwab news release. “While participants continued to invest heavily in mutual funds and equities overall, we also saw an increase in flows into exchange traded funds (ETFs). Some investors may be choosing ETFs as an alternative to mutual funds,”

Also according to the Schwab index,

  • equities comprised 30% of total SDBA assets, up 1% from the third quarter. Significantly, the Equities – Other sector captured 9.3% of net new assets, more than any other equities sector, representing increased interest in exchange traded funds (ETFs).
  • assets in fixed income vehicles and cash and equivalents dropped to 27% in the fourth quarter, down 3% from the third quarter and down 9% from one year ago.
  • on average, participants kept 85% of their total 401(k) plan assets in the SDBA account.

The SDBA Indicators report profiles the investment behavior of approximately 65,000 defined contribution plan participants investing through Schwab’s self-directed brokerage account, the Schwab Personal Choice Retirement Account (PCRA).

SDBAs are brokerage accounts within 401(k) plans and other types of participant-directed defined contribution plans that participants can use to invest in stocks, mutual funds and fixed income securities outside the plan.

Compliance March 1, 2004

Babies 'R' Us Settles Same-Sex Harassment Case

November 15, 2002 (PLANSPONSOR.com) - A former Babies "R" Us employee who claimed he was sexually harassed and once forcibly partially undressed has won a $205,000 lawsuit settlement, the US Equal Employment Opportunity Commission (EEOC) said.
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According to an Associated Press story, the EEOC reached the out-of-court agreement on behalf of Andres Vasquez with the Paramus, New Jersey-based Toys “R” Us, which owns Babies “R” Us.

The EEOC said Vasquez began working at a New Jersey Babies “R” Us store in February 2000, but quit seven months later, claiming he was the target of derogatory and unwelcome comments.

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Spokesman Edward McCaffrey said other co-workers felt Vasquez did not meet stereotypes of how men should look or behave. “His mannerisms were viewed by his co-workers as not masculine enough,” McCaffrey told the Associated Press.

According to the EEOC, the company took no corrective action even when, at one point, Vasquez claimed co-workers forcibly stripped him of his pants and underpants. The EEOC ruled that Vasquez’ federal civil rights had been violated by being subject to a sexually hostile work environment and filed suit.

As part of the agreement submitted to US District Judge William Bassler, Babies “R” Us admitted no wrongdoing in the case, but will instruct all New Jersey workers annually about federal anti-discrimination laws, the AP reported.

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