Capital Preservation

Capital Preservation

Capital Preservation covers investments such as stable value, general insurance contracts, fixed income and money market funds. As more plans and their participants become focused on the preservation of capital rather than its growth, there will be more scrutiny and interest in these types of investments. Industry veteran Sean Murray and his team at PIMCO focus on new and current products, as well as white papers, resources and research.

Wagner: GLWBs Key to Longevity Planning

“Right now is a pivotal time for the retirement plan industry,” declared Wagner Law Group president Marcia S. Wagner — capturing the tenor of a discussion about longevity planning at a March 23 panel discussion at the NAPA 401(k) Summit in New Orleans. Guaranteed income does not come from systematic withdrawals or managed payouts; the best solution, Wagner said, are guaranteed lifetime withdrawal benefits (GLWBs).   Read More

The Case for MMFs in DC Plans – Or Not

As the retirement industry is fighting to keep money market funds in pension plans and the SEC considers reforms spurred by the Great Recession, others are questioning whether MMFs belong in DC plans at all. In comment letters to the SEC, pension executives argue that MMFs offer stability, liquidity and low cost, with half of DC and DB plans offering them as an investment option.   Read More

Detroit Bankruptcy Filing Part of a Trend?

People are watching the Detroit bankruptcy filing carefully, wondering whether it is the start of a trend for other cities and municipalities in financial trouble – many driven by underfunded pension plans. Many state and local pensions have either invested poorly or have not realistically calculated their liabilities using fuzzy math.   Read More

Stable Value Quarterly Update from Blue Prairie Group

Stable value is one of the most popular investment choices in DC plans — and one of the least understood. Some advisors use this lack of understanding by plan sponsors and their competitors as a differentiator and prospecting strategy. The Blue Prairie Group, which provides quarterly updates and a succinct comparison of different types of products and questions advisors should be asking their providers, recently completed their report for 4Q 2012.   Read More

Stable Value Stable

With many investors concerned about capital preservation, more focus is being paid to stable value, which is one of the leading investments in that category. Research commissioned by MetLife, a stable value provider itself, shows that most plans are not considering making changes to their stable value lineup in the next 12 months.   Read More

Another Case of Irrational Exuberance?

Quoting Fed governor Jeremy Stein — and perhaps channeling Alan Greenspan — Bill Gross, in his latest investment outlook, ponders the question of whether we’re experiencing another bout of irrational exuberance with the recent run-up of the market. Is it sustainable, or are we playing a game of musical chairs? Is now the time to be hovering close to a seat?   Read More

Rethinking Optimal Wealth Accumulation Strategies in the Wake of the Financial Crisis

Using annual return data for large-capitalization stocks and corporate bonds from 1926 through 2011, researchers from Boston College’s Center for Retirement Research studied the distribution of historic returns and then used that distribution to determine optimal consumption and portfolio asset allocation for a risk-averse household facing labor-income uncertainty and longevity risk.   Read More

Stable Value Offers Shelter from Bond Bubble

Forbes’ Janet Novak highlights many of the benefits of a stable value fund, especially in a rising interest rate environment. For example, with $650 million in assets, the stable value asset class is widely misunderstood, creating a great opportunity for retirement plan advisors to differentiate themselves; and with proper protections in place, most stable value funds — even in an extreme rising interest rate environment — should maintain their principal and most of their yield.   Read More

A New Look at the Investment Habits of Affluent Versus Non-affluent Investors

New research from Wells Fargo details the differences in the savings and spending habits of affluent investors (those with assets in excess of $250,000) and those with less than $250,000 in savings. More than 50% of affluent investors utilize equities as a large portion of their asset allocation, the survey found (among other things), while just 35% of the non-affluent prefer stocks and would rather invest in cash, CDs, fixed income, etc. — a key point for many retirement plan advisors who are dealing mostly with less affluent investors.   Read More

Economic Outlook from PIMCO’s Bill Gross

Predicting continued slow growth of the U.S. economy and continued lower interest rates from the Fed, PIMCO’s Bill Gross predicts bite-sized future returns and the growing risk of misguided monetary policies leading to disruptive financial markets in the future. Citing lower capital spending and continued high household spending, the U.S. economy is not using cheap money to rebuild itself for the future.   Read More