The Markets October 26, 2010

Plans up 8% in Q310

The median return of the State Street Universe (SSU) of total plans rose 8% in the third quarter of 2010, following the 4.4%-loss in the prior quarter, State Street announced.
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For the twelve month period ending September 30, 2010, the universe returned 10.1%, according to the State Street data.

In the third quarter, master trust funds of greater than $1 billion returned 8.2%, slightly higher than smaller Master Trust Funds, which returned 8%.  Corporate Plans were up 10.7%, with the highest returns for the year ending September 30, 2010, while Taft Hartley Plans gained 10.2%.  For the quarter, plan results ranged from 8% (Endowments & Foundations) to 8.7% (Corporate Plans).

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According to State Street, equity funds rebounded strongly in the third quarter, more than offsetting second quarter losses.  International Emerging Market Equity Funds rose 19.1% in the third quarter, while U.S. Equity Funds gained 11.3%.  International Development Market Equity rose 16.2% and Global Equity Funds rose 14.5%. 

For the twelve-month period ending September 30, 2010, International Emerging Equity Funds again had the highest returns, rising 20.2%, while International Developed Market Equity Funds had the smallest gains, rising 5.8%.  U.S. Equity Funds rose 11.8% and Global Equity Funds rose 9%.

Fixed Income Funds performed well over the last 12 months, with both U.S. Fixed Income Funds and Global Fixed Income Funds up 10.2%.  In the third quarter, Global Fixed Income Funds gained 7.5% while U.S. Fixed Income Funds rose 3.1%.

The SSU consists of funds custodied at State Street and funds provided by the Independent Consultants Cooperative (ICC).  It consists of approximately 1,100 total plans of a range of plan sponsors and the nearly 20,000 individual funds that comprise each plan.  The combined asset value of the portfolios in the SSU exceeded $1.8 trillion as of September 30, 2010. 

The Markets October 25, 2010

Investors Primed to Get More into the ETF Market

Investors are looking for investments with many of the characteristics that exchange-traded funds (ETFs) have, according to a survey released by TD Ameritrade Holding Corporation.   
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ETFs have been available for nearly twenty years, yet their popularity is not widespread.  Just 34% of investors surveyed have heard of ETFs, 25% have a basic understanding of the product, and 15% have ETFs in their portfolios.

However, when asked what they are looking for in investment products, the answers matched up with many of the characteristics of ETFs, according to a press release from TD Ameritrade. For the nearly 40% of investors who said they are undecided about investing in ETFs, “the ability to reduce risk through diversification,” was the most commonly given answer when asked what their main requirement is for investment options.  “Lower expenses and fees” and “Ability to trade commission-free” were also the most common requirements among respondents.

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“ETFs may fulfill many of the stated needs that investors have told us are important to them,” said Mike McGrath, director of ETFs, TD Ameritrade. “It’s a matter of awareness, education, and simplifying the selection process.”

This online survey received results from 852 investors. TD Ameritrade recently unveiled an “ETF Market Center,” which includes a list of over 100 commission-free ETFs that have been evaluated and selected by Morningstar Associates, LLC, a registered investment adviser and unit of Morningstar.

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