Data & Research January 15, 2009

Some 401(k)s Show Increase of Withdrawal Requests

While the trend might only affect less than 1% of 401(k) participants, a spike in withdrawal requests and deferral rate decreases to zero percent should still be a cause for concern for plan sponsors.
Reported by

That was a key conclusion of a new Mercer analysis of January to December 2008 data for the 1.2 million 401(k) participants in the plans it administers for clients.

Mercer pointed to two potentially dangerous trends in its analysis:

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

  • a 59% increase in November and December for those asking for plan withdrawals
  • since July, a steady increase in the number of participants who have reduced their contribution rate to zero, and overall Mercer has seen more participants decrease rather than increase their contribution rates throughout 2008, a trend rarely seen in more stable economic times.

Mercer said participants have also shifted assets dramatically from equity markets into capital preservation funds. In fact, Mercer said that compared with the same time frame last year, balances and plan contributions in stable value and money market funds have grown 70% from 2007, while equity funds have decreased correspondingly.

Other findings from Mercer’s analysis include:

  • Mercer’s call center activity in September and October saw increases between 10% and 20%, but those are the only two months showing an increase since May 2008.
  • Mercer’s participant-related Web site traffic has remained fairly flat throughout 2008 with a spike occurring in October when the stock market had its most dramatic decrease.
  • Some 28% of 401(k) retirement plan participants have seen a 30% or more decrease in their account balances in 2008 through December.
Products January 15, 2009

Grail Advisors To Launch Two Actively Managed ETFs

Grail Advisors has filed a registration statement for two new actively managed exchange-traded funds (ETFs).
Reported by

The Grail American Beacon Large Cap Value ETF and the Grail American Beacon International Equity ETF represent what the firm said are “the industry’s first actively managed ETFs in the equity space using traditional active management,” according to a press release. Both funds will be sub-advised by American Beacon Advisors, Inc.

Grail Advisors will serve as the funds’ manager and intends to operate both of the new ETFs as actively managed, multi-manager ETFs. The funds will allow portfolio managers unrestricted trading, the announcement said. The funds’ portfolio holdings will be publicly disseminated on the Grail Advisors Web site each day the funds are open for business.

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

According to Grail, the two funds are the first in an anticipated series of offerings of the Grail Advisors ETF Trust. The firm is currently in discussions with a number of financial institutions and asset managers and expects to launch more customized, actively managed ETFs this year.

 

For more information or to obtain a prospectus, call 415.677.5870.

«