Data & Research July 28, 2011

Cerulli Identifies Niche Retirement Market Opportunities

A recent Cerulli report says that while "primary" retirement markets represent nearly $14 trillion in 2010, Cerulli identifies six niche markets currently representing $1 trillion.
Reported by

The report, “The Cerulli Edge: Retirement Edition,” says 401(k), 403(b), public and private defined contribution and defined benefit plans, and traditional and Roth IRA plans get the most attention since they are responsible for $14 trillion in 2010, there are burgeoning areas of growth and asset-gathering potential for firms willing to look beyond the crowded mainstream retirement markets.  

The six niche opportunities examined in Cerulli’s research include: 

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

  • Taft-Hartley Plans: In an effort to improve their funded ratios, these plans are primed to increase their allocation to international investments as they seek to improve performance. 
  • Nonqualified Deferred Compensation Plans (NQDCP): As economic conditions improve, hiring activity will lead employers to consider enhancements to benefit plans, such as adding a NQDCP, in order to gain an edge in the competition for talent.  
  • 457 Plans: While-asset gathering opportunity is limited and specific, firms that are able to offer a 403(b) plan together with a 457 plan are poised to win assets as this combination allows for the creation of higher balance accounts. 
  • 412i Plans: The asset manager opportunity is limited due to requirements related to the funding vehicles used in these plans. There are opportunities, however, for B/Ds and insurance companies because plans are attractive to small, but very profitable businesses, typically characterized by highly compensated, late-career professionals with significant assets. 
  • Small Business IRAs: With 70% of small business owners not saving for retirement in any vehicle, these plans provide the solution, and thus can’t be ignored by firms seeking asset-gathering opportunities.  
  • Solo 401(k) plans: Current growth is positive for these plans and may be augmented by Baby Boomers who, working past retirement age, may see the flexibility of a sole-proprietorship arrangement, and desire to continue to save for retirement through this familiar vehicle.  

The report is available for purchase from Cerulli.

The Markets July 28, 2011

ETF Inflows On Pace to Exceed $100B in 2011

Against a backdrop of historically low interest rates and global economic uncertainty, U.S. ETFs managed to attract $56.3 billion in new inflows during the first six months of 2011.
Reported by

This is up from $37.3 billion inflows during the first half of 2010. According to State Street Corporation’s 2011 Mid Year SPDR ETF Outlook, ETF investors increased their exposure to fixed-income, developed international markets, and dividend strategies while shifting away from emerging markets and small cap equities during this same period of time.  

“With demand for income and non-correlated assets on the rise, a growing universe of professional and retail investors are using ETFs to access precise sources of return and improve the diversification of their portfolios,” said Kevin Quigg, global head of the SPDR ETF Capital Markets Group at State Street Global Advisors.  “If flows remain on their current pace, 2011 will mark the fifth consecutive year that ETFs attract more than $100 billion in positive cash flows.”  

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

Among the key themes highlighted in the 2011 Mid Year SPDR ETF Outlook report are: 

  • Growth of ETF industry asset flows by category
  • Increased investment in ETFs that provide access to high dividend paying stocks
  • Outlook for ETFs that track real assets and non-U.S. equities and bonds, as investors rethink asset allocation
The 2011 Mid Year SPDR ETF Outlook report will be available at http://www.spdru.com.

«