Products January 3, 2019

Investment Product and Service Launches

American Beacon Advisors creates mutual fund with multi-asset program and Vanguard closes million-dollar securities fund to new clients. 

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Art by Jackson Epstein

Art by Jackson Epstein

American Beacon Advisors Creates Mutual Fund with Multi-Asset Program

American Beacon Advisors, Inc. announced the launch of the American Beacon AHL TargetRisk Fund, a newly organized mutual fund based on the existing Man AHL TargetRisk multi-asset program. The fund’s shares became available on December 31.

According to the firm, the American Beacon AHL TargetRisk Fund aims to provide capital growth with a balanced, long-only approach, active risk management, and diversification across a broad range of markets. Its proprietary quantitative approach seeks to provide an excess return with a stable level of volatility, regardless of market conditions. The fund allocates its assets across equities, bonds, interest rates, corporate credit, and commodities, investing primarily in derivatives vehicles. The fund’s sub-adviser is the London-based AHL Partners LLP (Man AHL), a wholly owned subsidiary of Man Group plc (Man Group), a global active investment management firm and one of the largest publicly listed global hedge fund providers.

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“We’re thrilled to partner again with Man AHL to bring this new Fund to market,” says Gene Needles, American Beacon’s chairman and chief executive officer. “We believe the launch of this strategy as a U.S. ‘40 Act vehicle is timely. By design, this fund is adaptive and capable of dynamically maneuvering through various market environments, potentially making it an attractive solution for investors seeking to diversify their portfolios as the U.S. bull market ages.”

The American Beacon AHL TargetRisk Fund is the second American Beacon fund to be sub-advised by Man AHL, which also sub-advises the American Beacon AHL Managed Futures Strategy Fund (Institutional Class, AHLIX; Investor Class, AHLPX).

Vanguard Closes Million-Dollar Securities Fund to New Clients

In advance of a planned liquidation coming in late March, Vanguard has closed its $962.5 million Vanguard Convertible Securities Fund to new investors.

Shareholders of the fund are being notified and have the opportunity to exchange into another Vanguard fund or redeem shares prior to the liquidation date, at which time the fund’s assets will be sold and the proceeds distributed. 

According to the company, Vanguard determined that investors could achieve similar risk-return exposures and long-term returns by investing in a diversified, balanced portfolio of global stock and bond funds.

Vanguard introduced the fund in 1986, primarily for pension funds, endowments, and corporate and non-profit retirement plans. Despite the fund’s capable adviser and prudent approach to managing convertible securities, the fund has not gained broad acceptance among these investors and remains one of the smallest offerings in terms of net assets among Vanguard’s stock and balanced offerings.

The liquidation is a result of Vanguard’s review of its global fund and exchange-traded fund (ETF) line-up. “We are adding new products that have investment merit and investor demand, changing advisers and mandates to improve investor outcomes, and eliminating funds that lack a distinct role or strong investment case,” says Matthew Brancato, head of Vanguard’s Portfolio Review Department, who noted that the company recently introduced two environmental, social and governance (ESG) exchange-traded funds (ETFs) and announced the merger of two equity funds.

Data & Research January 3, 2019

Majority of Americans Think They Are on Track for a Secure Retirement

However, they are worried about health care costs.

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Nearly two-thirds, 65%, of Americans are confident they have saved enough, or will save enough, to retire comfortably, Kiplinger’s Personal Finance learned in a survey. However, 22% are worried about high health care costs in retirement.

Eighty-five percent of those under 50 and 67% of those 50 and older expect to work full time as long as possible before retiring. Forty-seven percent expect to continue working after retiring. Forty-five percent are confident that Social Security will provide the income they expect.

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On average, Americans have saved $327,090 for retirement, saving an average of 13.3% of their annual income. Those making more than $100,000 a year have saved $670,810, and those making less than that have saved $180,200. Seventy-two percent of those with a mortgage expect to pay it off before retiring.

Overall, people are contributing an average of $11,910 to their workplace retirement plan each year. Among those with household incomes more than $100,000, they are contributing an average of $17,710, and those with household incomes of less than $100,000 are contributing $8,240.

Men think they will need a $985,929 nest egg to be able to retire, and women think they will need $828,360. Overall, people said they think they will need a $909,000 nest egg. Those with household incomes of more than $100,000 think they will need $1.5 million, and those with household incomes less than $100,000 think they will need $648,000.

Sixty-one percent of those with a long-term financial plan are working with an adviser. They median age at which respondents expect to retire is 64.7.

Seventy-three percent have a workplace retirement plan, 56% have a traditional individual retirement account (IRA), 42% have a Roth IRA, and 20% have an annuity.

Fifty percent of respondents expect to receive a pension, and among this group, 66% will take it as an annuity. The median amount they expect to collect is $2,190. The median expected percentage of income from Social Security is 30%.

Twenty-five percent would consider purchasing an immediate annuity. Twenty-three percent have long-term care insurance, and among those without this type of insurance, 30% would consider purchasing it in the future.

Among those who do not think they are saving enough for retirement, 28% say it is due to high health insurance and medical costs, 24% say it is due to disappointing investment performance, and 15% say it is due to debt other than student loans.

Thirty-four percent are considering relocating during retirement, with the top reasons being lower taxes, lower cost of living, warmer climate and to be with family.

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