Investing June 7, 2017

The Callan DC Index Rose 4.67% in Q1 ’17

It is the highest quarterly increase for the index since 2013.
Reported by

The Callan DC Index, which represents 90 large defined contribution (DC) plans with $150 billion in assets, rose 4.67% in the first quarter—its largest return since the end of 2013.

However, the age 45 target-date fund (TDF) rose 5.57% in the quarter. Callan says TDFs tend to outpace the index because it does not have as high an exposure to equities as TDFs. The age 45 TDF has 76% of its assets allocated to equities, whereas the index has only 69%, Callan says.

During the quarter, plan balances rose 4.74%, with the majority of that increase, 4.67%, due to market performance and only 0.07% due to contributions.

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The only equity class to see inflows during the quarter was emerging market equities, which had 1.95% of inflows.

Target-date funds took in 88 cents of every dollar that was invested in defined contribution plans in the first quarter. TDFs now account for nearly one-third, 32%, of plan assets. The next biggest fund holding is U.S. large cap equity funds, which account for 23% of plan assets, according to Callan.

Only 0.42% of assets in DC plans were exchanged for other investments, below the 0.64% historical average.

Full details of the Callan DC Index can be viewed here.

 
Deals and People June 7, 2017

Ascensus Acquires Cash Balance Leader Kravitz

Kravitz will keep its focus on cash balance plans, with Dan Kravitz maintaining a senior leadership role.

Reported by

Service and technology provider Ascensus announced the acquisition of Kravitz Inc., an independently owned retirement administration firm and cash balance plan specialist.

Kravitz, founded in 1977, designed its first cash balance plan in 1989 and has since grown into what many describe as the nation’s cash balance plan leader. The firm offers training, education and support on cash balance plans to its clients and an extensive network of financial advisers and third-party administrator (TPA) partners. Employing 85 individuals, it services more than 1,400 clients with retirement plans.

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During a recent conversation with PLANSPONSOR, Raghav Nandagopal, executive vice president of corporate development and mergers/acquisitions at Ascensus, said the firm is charging full steam ahead on the goal of rapidly building scale, partly through organic growth but also through rapidly paced mergers and acquisitions.

As a result of the acquisition, Ascensus will serve approximately 50,000 retirement plans. Kravitz will maintain its focus on cash balance plans, with Dan Kravitz continuing in a senior leadership role.

“Kravitz is renowned for its cash balance plan expertise, market leadership and client focus—we’re excited for its team of actuaries and retirement plan professionals to join the Ascensus family,” says Shannon Kelly, Ascensus’ president of retirement. “Cash balance plans are sophisticated and complex retirement plans that require a superior level of actuarial acumen; under Dan’s ongoing leadership, we anticipate extending our company’s growth into the mid-market segment.”

“The Kravitz team is looking forward to becoming part of Ascensus and continuing to help our clients save for a more secure retirement,” says Kravitz. “Our clients, employees and industry partners can expect us to keep providing state-of-the-art plan design and expert administration while remaining dedicated to our values of innovation, accountability and integrity.”

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