The Markets July 16, 2013

Equity, Fixed Income Get Equal Play in June

Defined contribution (DC) plan participants’ daily transfer volumes remained steady in June, according to the Aon Hewitt 401(k) Index.
Reported by

Transfers averaged 0.035% of balance totals per day. There were also five days in June when transfer activity reached above normal levels, below May’s total of nine days.

Daily trading equally favored both fixed income and equity-based investment vehicles during June, with each type of vehicle having net gains from transfer activity on 50% of the days. Throughout the second quarter, fixed income investments were slightly favored with gains on 52% of the days.

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

The total net transfer activity totaled $484 million or 0.35% of total participant balances. The second quarter had $880 million of net transfer activity, which is moderate to low compared with other quarters.

Transfers into diversified equity (equity excluding company stock) asset classes totaled $129 million or 0.09% of total assets. For the quarter, the total was $471 million (0.33%). However, when company stock is factored in, the quarterly total is cut in half.

Net outflows were concentrated among two asset classes: bond funds, which decreased by $300 million (62%), and premixed funds, decreasing by $157 million (32%). Outflows for the second quarter were also significant among bond funds, decreasing by $528 million (60%), while company stock funds lost $230 million (26%). Emerging market funds also decreased by $67 million (8%) during the quarter.

Net inflows were spread out among GIC/stable value funds, receiving $141 million (29%), large U.S. funds, which received $122 million (25%), and money market funds, receiving $71 million (15%). Mid U.S., small U.S., and international funds also had significant gains from transfer activity. Inflows for the second quarter were led by international funds, which received $169 million (19%); large U.S. received $152 million (17%), while mid U.S. and premixed funds each received about 15% of the flows. GIC/stable value and money market funds had significant inflows as well (14% and 12%, respectively).

Employee discretionary contributions decreased to 63.8% in equities for June. This is down from levels recorded at 64% both at the beginning of the quarter and at the end of May.

By the end of June, participants' overall equity allocation decreased to 62.2% from 62.5% at the end of May. The second quarter began with participant's equity allocation at 61.8% of total assets.

More information about the June index can be found here.

Products July 16, 2013

Reliance Trust Acquires Florida Bank and Trust

Reliance Trust Company acquired the trust and asset management business of Grand Bank and Trust of Florida, headquartered in West Palm Beach, Florida, effective July 31.
Reported by

Under the terms of the agreement, Reliance Trust will succeed Grand Bank as the agent of the trust and asset management relationships currently administered by Grand Bank. The two institutions will also enter into a long-term marketing and sales partnership to support the continued growth of trust and asset management services in south Florida.

To ensure continuity of Grand Bank’s client relationships, Reliance Trust will retain Grand Bank’s present trust officers and staff, including L. Joseph Covas Jr., executive vice president and chief fiduciary officer of Grand Bank. Covas will manage Reliance Trust’s activities as executive vice president and manager of wealth services in Florida. In addition, Reliance Trust will occupy the offices presently occupied by Grand Bank’s trust division adjacent to its Palm Beach Gardens bank branch.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“Grand Bank has been a back-office trust processing client of Reliance Trust since 2001 and is well known to us,” said James T. Maxwell, chairman, CEO and president of Reliance Financial Corporation. “This acquisition is progressive for both organizations. We are excited to expand our relationship with this transaction.”

«