Products January 19, 2011

Schwab Adds Two ETFs

Charles Schwab is offering the Schwab U.S. REIT (SCHH) and the Schwab U.S. Mid-Cap (SCHM) exchange-traded funds.
Reported by

A news release said the newest offerings expand its lineup to 13 equity and fixed income ETFs. They began trading on January 13, 2011.

The funds seek to track, before fees and expenses, the total return of the Dow Jones U.S. Select REIT Index and the Dow Jones U.S. Mid-Cap Total Stock Market Index. As of December 31, 2010, Dow Jones U.S. Select REIT Index had 82 securities and the Dow Jones U.S. Mid-Cap Total Stock Market Index had 495 securities.

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The Schwab U.S. REIT ETF (SCHH) may be appropriate for investors seeking to add exposure to both the commercial and residential U.S. real estate markets, providing greater sector diversification than by investing directly in real estate, the company said.

The Schwab U.S. Mid-Cap ETF (SCHM) can offer long term growth potential and access to the mid-cap segment of the U.S. equity market, giving investors diversified exposure representative of the broader U.S. stock market.

Compliance January 19, 2011

Consultant Says Distribution Recommendation is "Advice"

The Department of Labor (DoL) requested comments on if advice relating to a plan distribution should be included in the definition of "advice" under fiduciary standards; Aon Hewitt believes it should.
Reported by

In a letter to the DoL, Aon Hewitt said such a recommendation should be included in the definition of investment advice. The firm noted that differentiating between a recommendation to invest in plan options and to invest outside of the plan creates an inconsistency in the application of fiduciary rules under the Employee Retirement Income Security Act (ERISA) and could bias an adviser to recommend a distribution to both avoid ERISA fiduciary status and suggest an investment in which the adviser has a financial interest.  

“We view the application of fiduciary standards to advisers who recommend plan distributions as a logical application of ERISA’s fiduciary rules, and certainly in the best interests of participants and beneficiaries,” the letter said. 

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Aon Hewitt added that it anticipates that treating all recommendations relating to the application and management of plan assets consistently may result in more participants leaving their assets in their employers’ plans, which has benefits to both participants and employers.  

The firm’s letter is at http://www.dol.gov/ebsa/pdf/1210-AB32-017.pdf.

 

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