Data and Research January 11, 2018

SOA Measures Mortality ‘Anomaly’ in 2016

The slight decrease in overall mortality during 2016 measured by the Society of Actuaries may seem to run counter to the CDC’s report that life expectancy at birth declined 0.1 years, however both stats are in fact true.

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The rate of overall mortality improvement has slowed in the most recent five years, according to the latest mortality table analysis published by the Society of Actuaries (SOA).

SOA researchers created and released their latest report to provide insights on the historical levels and emerging trends in U.S. population mortality. The most recently released U.S. population mortality experience from 2016 has been incorporated and added to prior available data to enable analysis of mortality experience over the period 1999 to 2016.

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Turning to the fresh cut of the data, SOA finds the overall age adjusted mortality rate for both genders from all causes of death decreased by 0.6% in 2016.

“This decrease in overall mortality may seem to run counter to the CDC’s report that life expectancy at birth declined 0.1 years in 2016,” researchers note. “Generally, a decrease in the mortality rate would be expected to produce an increase in life expectancy. However, both figures are correct. In this respect, 2016 was a somewhat anomalous year.”

SOA researchers explain how, in most years, when age adjusted mortality rates decrease, life expectancy at birth would increase. Conversely, when age adjusted mortality rates increase, life expectancy at birth would decline. This is what occurred in 2015, SOA says, when age adjusted mortality increased by 1.2%, and life expectancy at birth declined by 0.1 years.

“The anomaly that occurred in 2016 is explained by the differing impacts on life expectancy of mortality rate changes of different ages,” according to SOA’s reporting. In 2016, increased mortality rates in the younger and middle ages (mostly due to accidents) reduced life expectancy at birth more than it was extended by mortality improvement at older ages. However, the overall age adjusted mortality rate for the entire U.S. population did decline, by the 0.6% cited above.

According to researchers, the practical outcome here is effectively that the overall decrease of mortality in 2016 reversed the experience of 2015. Mortality improvement in older age groups offset large mortality increases, mostly due to external causes, in middle age groups, SOA notes. All age groups, except ages 15 to 24, had lower mortality in 2016 than 1999.

Additional findings dissect mortality by gender, showing female mortality is lower than male mortality for all causes of death except stroke, which is similar, and for the combination of Alzheimer’s and dementia, which is higher. SOA further finds female-to-male mortality is comparatively much lower for external causes of death (accident, assault, and suicide) than natural causes of death.

The full analysis can be downloaded here.

Products January 11, 2018

Investment Products and Services Launches

Invesco launches Peak Retirement Target-Date Fund Series, and Efficient Advisors launches mutual fund partnership with Dimensional.

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Invesco has announced the launch of the Peak Retirement Target Date Fund Series (PRF). The series is comprised of 12 outcome-oriented target-date funds (TDFs) offered in five-year increments. 

The investment approach for the funds will follow a glide path, managed by the Invesco global solutions development and implementation team. The glide path adjusts the underlying asset classes periodically to become more conservative as the stated target retirement date approaches.

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“Invesco’s new target date series is one of the few to include active, passive and factor-based strategies along with alternatives exposure in a cost-efficient package,” says John Galateria, head of Invesco’s institutional business. “The unique investment approach to volatility seeks to limit the range of outcomes, which is critical, particularly for participants approaching retirement.” 

Key portfolio characteristics include a “through retirement” glide path designed to account for an investor’s full life expectancy, a managed volatility approach, as well as portfolios combining active strategies plus factor-based and market-cap-weighted exchange-traded funds (ETFs). Alternatives seeking to generate higher risk-adjusted returns and downside protection are also part of the mix.

As part of a long term strategic plan, Invesco will be expanding its defined contribution (DC) product offerings, leveraging its global solutions capabilities. 

Efficient Advisors Launches Mutual Fund Partnership with Dimensional

Efficient Advisors LLC has announced the new offering of Dimensional Fund Advisors (Dimensional) mutual funds to the advisers using the Efficient Advisors turnkey asset management platform (TAMP).

Dimensional targets higher expected returns by using the information in prices and fundamentals data to construct fully diversified portfolios, while seeking to mitigate unnecessary risks. 

“We are delighted to be able to increase the options we provide our advisers while adhering to our low-cost, diversified philosophy of asset management,” says Chris Powers, national sales manager for Efficient Advisors. “Like Dimensional, we believe in the power of factor investing. In working with Dimensional we have yet another way to help our advisers position their clients to take advantage of factors at a reasonable cost.”

Efficient Advisors’ portfolio models will deploy Dimensional’s mutual funds to build factor-based portfolios at various levels of risk so advisers can address their clients’ goals and needs.

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