Investing April 17, 2001

S&P: Equity Income Funds May Offer Stability

April 17, 2001 (PLANSPONSOR.com) - Equity income funds may provide a safe harbor in the current market turbulence, according to Standard & Poor's Fund Services Research.
Reported by

In an article published today in the Select Fund Bulletin, the researchers say that equity income funds try to provide a high level of current income typically by investing at least 65% of its assets in dividend-paying stocks.

The total return for an equity income fund should be viewed as the combination of receiving high dividend payments and the capital appreciation earned on the stocks held in the portfolio.

Get more!  Sign up for PLANSPONSOR newsletters.

Mature Perspective

The S&P researchers said that stocks paying high dividends tend to represent companies in the mature stage of their lifecycle with a stable growth rate.

While they may not provide large upside potential, there is a large degree of downside protection. In a downward market, the downside protection is invaluable, the researchers said.

According to S&P, equity income funds should be considered within the large cap value style category. Using three- and five-year rolling periods over 10 years through January 31, 2 001, it was found that equity income funds have a 99% correlation to large cap value funds.

Benefits April 16, 2001

Long-Term Care Coverage Expands

April 16, 2001 (PLANSPONSOR.com) - While more employees were covered by long-term care coverage last year, fewer new employers embraced the benefit in the face of rising premiums.
Reported by

Still, the passage of the Federal Long-Term Security Act of 2000, the proposed tax reform, and the results of a recent survey point to a positive outlook for employer-sponsored long-term care insurance.

An 11-year ongoing long-term care market study by LIMRA International also found that in 2000, compared to 1999:

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

  • the number of those covered by employer-sponsored long term care insurance increased by 19%
  • new employers offering the benefit fell by 6%
  • the number of participants was actually 22% lower
  • while, premiums increased by 6%

In addition, the study found that almost 3,800 employers offered plans, covering some 929,000 employees by the close of the year. If self-funded public employer plans are added to the total, enrollment figures reach over one million in total.

The Passage of the Federal Long-Term Care Security Act of 2000 will boost those numbers further, when long-term care insurance is offered to approximately 20 million active and retired federal employees, postal workers, military and eligible family members in October 2002.

The Office of Personal Management estimates that between 300,000 and 600,000 of these individuals will enroll during the first sign-up period, which will be held before the program starts.

Market share is highly concentrated for LTC, with the top five companies accounting for 85 percent of all in-force group premium.

«