The Markets February 3, 2016

Institutional Investors See First Losing Year Since Financial Crisis

2015 was the first calendar year since 2008 that institutional investors overall had a negative return.
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Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS), saw the first negative calendar year since the financial crisis, with a median return of -0.17%.

“Similar to 2013 and 2014, this was a quarter and a year where exposure to U.S. equities trumped most other asset classes. The main exception in performance for 2015 was the U.S. real estate asset class with the Wilshire US RESI gaining 7.64% and 4.81% for the quarter and year, respectively. The Wilshire 5000 Total Market Index was up 6.36% and 0.67% during the fourth quarter and in 2015, respectively, versus the MSCI AC World ex U.S. or international equity’s 3.24% gain for the quarter and -5.66% loss for the year,” says Robert J. Waid, managing director, Wilshire Associates.

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Waid noted that bonds were flat, as the Barclays U.S. Aggregate fell -0.57% for the fourth quarter but held on to a gain of 0.55% for the year.

All plan types had a median return of 2.41% for the quarter, registering a slight bounce off the third quarter’s worst quarter in four years. Taft Hartley Health and Welfare Funds had a median return of 1.54% and Taft Hartley Defined Benefit Plans had a median return of 2.96% for the quarter.

“The spread for 2015 returns was also small, with a low of -0.45% for Foundations and Endowments and a high of 1.37% for large Foundations and Endowments with assets greater than $500 million,” Waid adds.

“Since small plans generally have larger exposure to U.S. Equities than large plans, it is again surprising that large plans outperformed smaller plans for the year,” says Waid. “All plan types with assets greater than $1 billion had median returns of 2.13% and 0.35% for the quarter and year, respectively, compared to plans with assets less than $1 billion with median returns of 2.49% and -0.27%, respectively.”

Client Service February 3, 2016

The Many Worries of Generation X

Far and away the most financially stressed generation of U.S. investors, Gen X is clearly a good target for advice. 
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Generation X is starting to think more seriously about retirement and is wondering if they will have enough money to carry themselves through their golden years, according to financial services firm Scottrade, Inc.’s 2016 American Investor Report.

Although investors in general are confident that they will have enough money when they retire, Generation X is far less confident than other generations that they will be able to make ends meet in retirement. Only one in five Gen Xers (19%) are extremely confident, compared with about one in three Baby Boomers (31%) and half of Millennials (48%) and Seniors (51%).

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Additionally, while retirement is the top financial priority for most generations, Gen Xers feel the least prepared for retirement. Three-quarters of Gen Xers (who are ages 35 to 49) call retirement a financial priority, but 28% say it is the one financial priority they are least prepared to meet (vs. 17% of Millennials, 14% of Boomers and 12% of Seniors).

Perhaps because they are concerned about having enough money to retire, more than half of Generation X (56%) plans to work in retirement to supplement their income. However, research shows those plans may not pan out. Further, they are the most likely generation to say they want to work part-time in retirement (32% versus 18% of Millennials, 23% of Baby Boomers and 13% of Seniors).

NEXT: Gen X’s other financial concerns

Retirement isn’t the only thing Gen Xers are concerned about; job security and education expenses are also keeping them up at night.

While Baby Boomers were dubbed “The Sandwich Generation” because they found themselves raising children and caring for aging parents at the same time, Generation X appears to be “The Worried Generation,” as many were hit hard by the financial crisis and have ongoing concerns about job stability.

While all generations stress about the uncertainty over the economy, Gen X also stresses about not having enough money to pay the bills (36%). Nearly half (44%) say a job loss would delay their retirement plans—far more than any other generation. What’s more, Gen Xers find themselves sandwiched between paying off their own student loans and saving for their children’s education while trying to save for retirement.

“Generation X clearly has many serious concerns about financial stability and saving for the future, whether it’s retirement, their children’s education or achieving life-long dreams,” says Erik Merkau, president of Scottrade Investment Management. “They are more worried about job stability than any other generation. And if you think of their mindset—coming of age watching their parents deal with intense unemployment, this makes sense. They’re the first generation that has to cope with paying off large student loans while saving for retirement and their children’s education, which creates a great deal of stress and a sense of uncertainty for Gen Xers.”

The 2016 American Investor Report is based on research conducted online among 1,001 U.S. investors.

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