1) BrightScope/ICI: New Data Reveal How Employers Customize Their 401(k) Plans to Encourage Saving ICI | 3/12/2018
Because… The BrightScope/ICI analysis of plans with 100 or more participants shows that although 80% of plans offer target-date funds (TDFs) and 78% of participants are offered TDFs, only 19% of assets were in TDFs in 2015. Participants in 401(k) plans with assets of $1 million to $10 million invested 26% of their assets in TDFs and 2.3% in other investments, which include company stocks, whereas participants in plans with more than $1 billion of assets allocated 15.7% of their assets to TDFs and 22.6% to other investments. These stats indicate that employees of the largest companies put a bigger portion of assets into company stocks than TDFs, while workers in smaller plans held more diversified portfolios through TDFs.
2) First Trust Files for TCW Unconstrained Plus Bond ETF SEC Filings | 3/13/2018
Because… Besides First Trust, Hartford and Franklin Templeton also filed for actively managed taxable bond ETFs last week. Hartford Short Duration ETF will be sub-advised by Wellington Management while three Franklin Liberty ETFs will be run by the firm’s internal teams. Taxable Bond dominates the active ETF arena with 71% of assets at the end of 2017. We expect the asset class to remain the product development focus in 2018 due to the absence of the portfolio transparency issue. First Trust is the second largest ETF provider in the actively managed Taxable Bond ETF space with assets of $8.6 billion as of year-end 2017. The new First Trust fund marks the second collaboration with TCW. First Trust TCW Opportunistic Fixed Income ETF has amassed $284 million since its inception on February 14, 2017.
3) Investors Shed US Equity ETPs as Global Inflows Slow, Finds BlackRock ETF Strategy | 3/13/2018
Because… While global ETP sales landed in positive territory in February, U.S.-listed ETPs experienced net redemptions. Based on Morningstar data, ETPs in the U.S. suffered net outflows of $5.1 billion, a dramatic reversal from the record high inflows of $76.8 billion in January. U.S. investors yanked $14.7 billion out of U.S. Equity after pouring $33.9 billion into the asset class in the prior month. International Equity garnered $10.5 billion, only half of its January intake. Taxable Bond raised $1.8 billion, just one-fifth of its inflows of $9.0 billion in the previous month. Accelerated volatility, the sharp selloff in equities, and the fear for rising interest rates may have taken a toll on overall ETP sales.