The Markets November 13, 2013

Mutual Fund Inflows Strong in October

Estimated mutual fund inflows for October set the highest monthly pace measured since January, with U.S. equity funds collecting $10.5 billion in new assets.
Reported by

According to research published by Morningstar, Inc., international equity funds also saw strong inflows and led all mutual fund category groups with inflows of $12.2 billion during October. But continued outflows from taxable- and municipal-bond funds tempered overall inflows, which totaled $17.8 billion for the month.

Active U.S. equity funds showed strong monthly inflows for just the third time in 2013, a year many expected to be dominated by active strategies after years of passive-fund flow dominance. While the trend has not materialized, outflows from active equity funds slowed from $131.5 billion in 2012 to just $15.3 billion measured so far this year.

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

Including exchange-traded funds, U.S. equity funds brought in $25.9 billion in October, while $22.4 billion went into international stock funds and $6.8 billion went into sector funds. Of that $55.1 billion total, $16.6 billion went into active funds, the research shows.

Looking at flows by Morningstar Category, equity categories took the top three spots, led by foreign large-blend funds. Foreign large-blend funds have brought in $46.7 billion year to date, compared with just $1.1 billion in all of 2012.

While diversified emerging-market ETFs have seen outflows of $986 million so far this year, mutual funds in the category have had inflows of $38.3 billion.

Other figures in the Morningstar report show October was the first time since March that bank loan, nontraditional bonds or world bonds did not lead all categories for inflows. October was also the first month in more than a year during which the bank loan category did not rank in the top five.

While those categories were not as dominant, investors continued to shift away from interest-rate risk. Intermediate-term bond and municipal-bond fund categories continued to suffer outflows, although the $7.9 billion outflow from intermediate-term bond funds was the smallest since April, and the $5.4 billion outflow from municipal-bond funds was the smallest since May.

Inflation-protected bond funds saw their largest outflow on record as $4.8 billion left the space. The average fund in the category has lost 5.9% so far this year.

Morningstar estimates net flow by computing the change in assets not explained by the performance of the fund. Morningstar’s complete report about October asset flows can be found here.

Products November 13, 2013

Principal Launches Retirement Education Program for Hispanics

The Principal Financial Group introduced a retirement education program designed to encourage Hispanic employees to participate more in retirement plans.
Reported by

Research from The Principal shows Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers, often due to language barriers and cultural influences. To that end, Principal’s new program will not only translate retirement education materials into Spanish, but also address the cultural underpinnings that may influence how Hispanic employees think about their financial futures.

“Our research found that simply translating materials to Spanish, without considering overall cultural views, falls short in encouraging U.S. Hispanic workers to save for retirement,” says Greg Burrows, senior vice president, The Principal, based in Des Moines. “Retirement plans are not universally appealing to all groups. This new program takes a holistic approach, recognizing that an employer-sponsored plan may be a new concept depending on the level of acculturation of the work force, and incorporating culturally appropriate retirement education services.”

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

According to The Principal’s research, when exposed to such an approach, many Hispanic workers take favorable savings actions. The Principal also found once U.S. Hispanic workers start to participate in a company plan, they tend to embrace saving for a long-term goal.

The program provides retirement education for employees built around key concepts that incorporate cultural relevance. The education can be tailored based on the characteristics of a given U.S. Hispanic work force.

“Hispanics are expected to account for 75% of the nation’s work force growth in the next decade,” says Burrows. “Financial professionals have a significant opportunity to help employers meet the specific retirement needs of this younger, burgeoning demographic. Our program is a differentiator because it goes beyond language to address cultural influences.”

The Principal offers a number of materials to help those with Hispanic members of their work force, including a report title “U.S. Hispanic Retirement Attitudes: How Cultural Influences Can Impact Retirement Savings.” A copy of the eight-page report can be found here. More information about the education program can be found here.

«