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The conventional wisdom — as is evident from the mainstream glide paths embedded in the most popular target date funds (TDFs) — is that DC investors should be invested in portfolios that decrease investor equity exposure over time.
Before World War II, Japan was known as the Land of the Rising Sun. After its devastating defeat, however, it became known as the “land of the setting sun” — a description that became the title of a book by the well-known Japanese novelist, Osamu Dazai.
A Money magazine article published Sept. 2, “Why Your 401(k) May Only Return 4%,” makes this point: “The biggest dilemma in retirement investing may be how hard it will be to grow our savings in the next decade.”
Plan sponsors often look to their plan advisor to provide some perspective on the impact of current geopolitical events on the markets. This is especially the case when asset prices are high and the bears are out and about, with many predicting an imminent demise in the equity market.
In a recent post on the JD Supra Business Advisor website, ERISA attorney Ary Rosenbaum makes the reasonable argument that plan investment menus should be "pruned" down to 12 funds, "maybe 15 at tops," if they have not been pruned already.
In a recent Wall Street Journal article, “Hedge Funds in Your 401(k): Do they Fit,” Jason Zweig discusses the possible “place” of alternatives in 401(k) plans. In the article, “alternatives” refers to “anything other than plain old stock or bond portfolios.”
In Morningstar’s recent Rekenthaler Report, “Do Active Funds Have a Future,” John Rekenthaler considers the future of active management. His short answer: “Apparently not much.”
A recent article in The New York Times, “Fund Investors Basking Under Many Clouds,” considers what seems to be complacency on the part of “investors who have displayed a growing appetite for risk and a striking lack of concern about any reversal of fortune.”
The Wall Street Journal published an article July 6 entitled, “Percentages vs. Dollars — a Battle for Investors' Attention.” Basically, the article contends that, “percentages don't seem like real money to many people. In particular, some experts worry that investors don't fully grasp the magnitude of risks and expenses when they see them in percentage form.”
In a recent Motley Fool post, the author states: “a new start-up company is looking to bypass the management fees that ETFs charge, instead giving you direct access to baskets of stocks for a single inexpensive commission — and letting you tailor the portfolio to your own particular needs.”
Many 3(38) investment advisors are in a position to look further around the corner and take the position that TDFs should be dynamically managed over time based on market conditions. (Summer 2014)
No matter how many times you say it — “past performance is not a predictor of future performance” — it just does not sink in. The challenge goes deeper than simply being an educational issue in that we have been hard-wired through many eons of evolution to be backward-looking, pattern-seeking creatures.
A new study from Principal concludes that investors need to be more selective in both the countries they choose to invest in and the selection of individual securities in those countries. But there’s more to the emerging markets picture.
A recent EDHEC-Risk Institute study reveals some interesting trends in the adoption of smart beta ETFs in Europe.
This week, RIABiz posted an article highlighting two trends in the 401(k) ETF-only space.
Last week Fidelity Investments released a study which found that “the majority (63%) of Fidelity’s 401(k) investors are taking a ‘Do It Yourself’ approach to 401(k) investing” while only “37% are taking a ‘Do It for Me’ approach and using professional management.
A recent study conducted by Financial Engines and Aon Hewitt, “Help in Defined Contribution Plans: 2006 Through 2012,” explores the impact of using “help.” The study defines “help” as either having more than 95% of DC investor assets in two or less target date funds (TDFs), 100% of assets in a managed account or utilizing online advice.
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