Target-Date Funds See Positive Q310

As a result of a Q310 turnaround in equity returns, as well as continued positive performance in the fixed-income market, target maturity funds strolled into the fourth quarter on a positive note, according to a Morningstar report.

For the quarter, the average target maturity fund returned just over 10%, slightly less than the 11.3% of the S&P 500 Index but significantly above the 2.5% of the BarCap U.S. Aggregate Bond Index. The weighted average return of the 13 indexes that collectively form the Morningstar Lifetime Moderate Index family fell between the target maturity fund average and the S&P 500 index with a 10.8% return.

These strong returns were especially welcome after the second quarter when the funds and indexes declined more than 7% on average, Morningstar said. For the 12-month period ending September 30, 2010, performance for each metric was similarly strong, falling between 9.3% and 10.4%.

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Although all asset class returns were positive during this period, those funds with higher allocations to equities, particularly to non-U.S. developed equities, commodities, and real estate tended to be the top performers.

The returns for all of the indexes in the Morningstar Lifetime Allocation Index family were positive over the past three months, with even the most conservative indexes having returns above 4% while the most aggressive topped a 13% return, Morningstar said.

Over the past year, the range of returns was tighter with the most conservative indexes returning just less than 8% and the most aggressive indexes returning just over 11%. The top two performing equity asset classes this quarter were emerging markets equity and non-U.S. developed equity as the dollar weakened, supporting non-dollar denominated assets. Within fixed income, all asset classes were positive as well (both the third quarter return and 12-month standard deviation were slightly higher than 0% for cash but show as 0.0% due to rounding).

The 12-month returns for all asset classes were also in positive territory. REITs continued to be the biggest winner over this period with a stellar 30% return, while emerging markets equity was also a top performer with more than a 20% gain.

Within the United States, growth outperformed value and small cap outperformed large cap during this time. High-yield bonds continue to perform similar to equities.

Newport Offers Online Financial Account Aggregation

The Newport Group introduced a new personal account aggregation feature for participants in its plans.

The service consolidates all of a user’s personal savings, investment and other accounts on one secure site. Accessible through Newport’s Web site, plandestination.com, the service is integrated with both retirement and executive benefit plans.  

According to a press release, the service aggregates all of a plan participant’s financial holdings into a single, consolidated view. Each of an individual’s assets (executive benefit accounts, 401(k) and other retirement accounts, brokerage accounts, savings/checking accounts, real estate), and liabilities (mortgage, credit cards and other loans) are shown on a “dashboard” page that displays a summary of all assets and liabilities, as well as total net worth.  

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“These summaries are updated every business day,” said Newport Group’s chief operating officer Bryant Kirk, in the announcement. “In addition, users can also search for and view individual transactions, as well as creating alerts to notify them about balance activity. The result is a ‘live’ and up-to-the-minute view of an individual’s total financial holdings—something that will be of particular value to those participants who work with a financial adviser.”   

Newport has partnered with CashEdge to provide this service, and participants’ personal account information will be stored and maintained in CashEdge’s secure data centers.

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