Products January 30, 2008

MacKay Shields Announces High Yield 130/30 Fund

MacKay Shields LLC, and its affiliate New York Life Investment Management (NYLIM), announced the availability of the company’s first 130/30 fixed income product offering.
Reported by

The MainStay 130/30 High Yield Fund, launched on December 14, 2007, is sub-advised by MacKay Shields, and is NYLIM’s first short-extension high yield product, a company announcement said. The offering adds to a NYLIM 130/30 product lineup that includes several 130/30 equity products managed by NYLIM’s Equity Investor’s Group.

The fund normally invests at least 80% of its assets in high-yield corporate debt securities. Benchmarked to the Merrill Lynch U.S. High Yield Master II Constrained Index, the MainStay 130/30 High Yield Fund provides MacKay’s High Yield Active Core (HYAC) team the flexibility to short bonds, allowing managers to capitalize on both positive and negative return forecasts.

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“130/30 strategies have emerged as a viable solution for institutional investors seeking to benefit from exposure to short equity positions in a measured, risk-controlled manner. We believe the same opportunity exists in fixed income portfolio management,” said Osbert Hood, chairman and chief executive officer of MacKay Shields LLC, in the announcement.

In Practice January 30, 2008

Annuities in 401(k) Plans Increasingly Accepted

Annuities in defined contribution plans are gaining momentum as aging baby boomers seek to create guaranteed retirement income streams, according to a report from the Financial Research Corporation (FRC).
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The report, “Guaranteed Annuities in Defined Contribution Plans: Current Products and Future Prospects,” reveals key trends that will determine the evolution and success of annuities in DC plans, provides in-depth product profiles for current plan offerings for Genworth ClearCourse, Hartford Lifetime Income, MetLife Personal Pension Builder, and Prudential IncomeFlex, and defines four steps manufacturers should take to overcome adoption challenges, FRC said.

Luis Fleites, Vice President and Director of Retirement Markets at FRC said the first step to facilitating a more widespread acceptance of annuities within 401(k) products is to amend the negative perception of annuities through communication and education at the platform level. The communication needs to be adapted so participants are aware that they are purchasing an income option, Fleites said in a press release.

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The report findings indicate that these communication and educational strategies vary from firm to firm and provide examples.

FRC said it expects to see strategies evolve as manufacturers and recordkeepers identify successful marketing strategies for both plan sponsors and participants. Now that a framework for these products has been established, new entrants in the marketplace should be able to capitalize on the progress already achieved, FRC said.

The company also said it expects the emergence of guaranteed retirement income as an asset class within plan offerings.

For more information on the FRC research report, contact Trisha Langlois at FRC at (617) 824-1204 or via e-mail at Trisha.Langlois@frcnet.com.

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