Products August 31, 2017

Investment Products and Service Launches

Reliance Trust Company Partners with Northern Trust and Wilshire Launches ESG Intermediate Credit Index
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Reliance Trust Company Partners with Northern Trust

Northern Trust has been selected by Reliance Trust Company to provide back-office support including custody, fund accounting, and transfer agent services for a collective investment trust (CIT) subadvised by Driehaus Capital Management.

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Northern Trust’s Global Fund Services unit provides fund administration, global custody, and investment operation outsourcing solutions to more than 650 asset managers across the globe. It has experience in traditional and alternative investment vehicles.

“We are excited to be working closely with both Reliance Trust and Driehaus Capital Management to support this CIT fund for qualified retirement plans,” said Dan Houlihan, head of Global Fund Services in North America. “Our strong back-office service, expertise and technology, combined with Reliance Trust’s ERISA experience, bring together two parties with exceptional financial strength on behalf of asset managers like Driehaus Capital Management.”

Tom Seftenberg, managing director at Driehaus Capital Management, adds, “Reliance Trust and Northern Trust were selected as our CIT distribution platform based on their joint dedication to understanding our business and strategic goals through innovation and proactive engagement. Northern Trust’s culture of client service excellence and Reliance Trust’s commitment to oversight dovetail nicely with our investment responsibilities and distribution efforts.”

NEXT: Wilshire Launches ESG Intermediate Credit Index

Wilshire Launches ESG Intermediate Credit Index

Wilshire Associates has expanded its Powered by Wilshire index with the addition of the Sage ESG Intermediate Credit Index. It is designed to provide an index optimized for highest Environmental, Social & Governance (ESG) ratings as well as liquidity.

The Sage ESG Intermediate Credit Index uses a systematic, rules-based approach to identify securities from the Bloomberg Barclays US Intermediate Credit Index with optimal ESG ratings, while closely aligning duration and risk characteristics to the Bloomberg Barclays US Intermediate Credit Index.

This Powered by Wilshire index was created by its owner Sage Advisory Services and Wilshire is retained as the index consultant and calculation agent.

“Aligned with Wilshire as our index consultant and calculation agent, our objective was to create an index that maximizes exposure to positive ESG qualities,” said Bob Smith, president and chief investment officer at Sage Advisory. “ESG is gaining a lot of traction and this index will serve as a great example of how powerful this method of investing has become.”

For more information about the newly launched SAGE ESG Credit index, visit Wilshire.

Data & Research August 31, 2017

DC Plans Account for 28% of the Nation’s $26.1 Trillion in Retirement Assets

The Investment Company Institute has issued a report, “Ten Important Facts About 401(k) Plans.”
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At the end of the first quarter of 2017, Americans held $7.3 trillion in defined contribution (DC) plans, accounting for 28% of the $26.1 trillion in retirement assets, according to a report from the Investment Company Institute (ICI), “Ten Important Facts About 401(k) Plans.”

At year-end 2015, 38% of 401(k) participants were under the age of 40. Twenty-five percent were in their forties, 26% were in their fifties, and 11% were in their sixties.

Fifty-one percent of U.S. households owning DC accounts in mid-2016 had incomes between $25,000 and $99,000. Forty-four percent had incomes of $100,000 or more, and 5% had incomes of less than $25,000.

Ninety-one percent of 401(k) participants said that payroll deduction makes it easier to save, and 90% said owning a DC account helps them to think about their long-term needs. Eighty percent said that the tax treatment of their DC plan is a big incentive to save, and 81% said that their plan offers them good investment options.

Eighty-nine percent of participants receive matches from their company. While this is only 63% in plans with less than $1 million in assets, the incidence of company matches rises as assets rise, to as much as 96% of plans with more than $100 million in assets.

Balances in 401(k) plans rise with participant age and job tenure. For example, the average account balance of participants in their sixties with up to two years of tenure was $37,976, but $280,976 for participants in their sixties with more than 30 years of tenure. Similarly, the average account balance of participants in their forties with up to two years of tenure was $19,088, compared with $158,182 for participants in their forties with more than 20 years of tenure.

Domestic equity funds, international equity funds and domestic bond funds were the most likely investment options to be offered in 401(k) plans. Just over three-quarters, 75.5%, of plans offer target-date funds (TDFs).

At year-end 2014, 43.1% of 401(k) plan participants’ account balances were invested in equity funds. Following that, 19.8% were invested in TDFs, and 8.1% in bond funds.

In 2016, the average expense ratio for equity mutual funds offered in the U.S. was 1.28%; however, in 401(k) plans, the average expense ratio for equity mutual funds was just 0.48%.

Finally, at year-end 2015, only 16% of participants had a 401(k) loan outstanding.

ICI’s full report on the 10 important facts can be downloaded here.

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