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How America Saves 2015

June 25, 2015 Comments off

How America Saves 2015
Source: Vanguard
Defined contribution (DC) retirement plans are the centerpiece of the private-sector retirement system in the United States. More than 90 million Americans are covered by DC plan accounts, with assets now in excess of $6.5 trillion.

Participants’ adoption of professionally managed allocations continues to grow. In 2014, 45% of all Vanguard participants had their entire account balance invested in either a single target-date fund, a single target-risk or traditional balanced fund, or a managed account advisory service. These professionally managed investment options have the potential to reshape retirement savings outcomes for these participants. They signal a shift in responsibility for investment decision-making away from the participant and back to employer-selected investment and advice programs. We predict that sometime during 2015, half of all Vanguard participants will be using a professionally managed allocation.

GAO — 401(K) Plans: Frequent and Collective Trading Are Uncommon and Not a Significant Concern for Plan Participants, Sponsors, or Mutual Funds

June 16, 2015 Comments off

401(K) Plans: Frequent and Collective Trading Are Uncommon and Not a Significant Concern for Plan Participants, Sponsors, or Mutual Funds
Source: Government Accountability Office

401(k) plan participants often face trading policies that restrict frequent or collective trading in mutual funds. The most common restrictions were (1) discretionary provisions found in mutual fund prospectuses that allow mutual funds to reject purchases or exchanges of mutual fund shares they find inappropriate or disruptive to the fund’s investment and management strategy and (2) time limits on how quickly a participant can purchase additional shares after trading out of a fund.

Frequent and collective trading by plan participants are uncommon. Since the market timing abuses in mutual funds of the early 2000s, neither frequent nor collective trading by participants has been a concern for plan sponsors, mutual funds, or participant advocates that GAO interviewed.

There was general agreement among industry representatives, participant advocates, and other stakeholders that GAO interviewed that current regulation strikes an appropriate balance between a participant’s ability to manage his or her retirement investments and the duty of plan fiduciaries to operate and manage their plans prudently, at low cost, and solely in the interest of participants, and the obligations of mutual funds with respect to all their investors.

Hedge Fund Industry Adapting To Changing Investors, Products And Markets, According To New Industry Study

June 4, 2015 Comments off

Hedge Fund Industry Adapting To Changing Investors, Products And Markets, According To New Industry Study
Source: KPMG

A global hedge fund report produced by KPMG International, the Managed Funds Association (MFA), and the Alternative Investment Management Association (AIMA) finds that the hedge fund industry is transforming, with managers increasingly focused on customized products and solutions, new investors, and emerging markets. The report “Growing Up: The new environment for Hedge Funds” is based on global research, with more than 100 hedge fund managers representing approximately USD440 billion of assets under management.

Investment Climate Statements 2015

June 2, 2015 Comments off

Investment Climate Statements 2015
Source: U.S. Department of State

Investment Climate Statements provide country-specific information and assessments prepared by U.S. embassies and diplomatic missions abroad on investment laws and practices in those countries.

An objective look at high-frequency trading

May 28, 2015 Comments off

An objective look at high-frequency trading
Source: PricewaterhouseCoopers

Today’s trading is complex and frequently involves little human intervention. Five years after the “Flash Crash,” do you know how high frequency trading and dark pools work? Our new report separates fact from fiction.

Discount Rate (Risk-Free Rate and Market Risk Premium) Used for 41 Countries in 2015: A Survey

May 27, 2015 Comments off

Discount Rate (Risk-Free Rate and Market Risk Premium) Used for 41 Countries in 2015: A Survey
Source: Social Science Research Network

This paper contains the statistics of a survey about the Risk-Free Rate (RF) and of the Market Risk Premium (MRP) used in 2015 for 41 countries. We got answers for 68 countries, but we only report the results for 41 countries with more than 25 answers.

The average (RF) used in 2015 was smaller than the one used in 2013 in 26 countries (in 11 of them the difference was more than 1%). In 8 countries the average (RF) used in 2015 was more than a 1% higher than the one used in 2013.

The change between 2013 and 2015 of the average Market risk premium used was higher than 1% for 13 countries. Most of the respondents use for US, Europe and UK a Risk-Free Rate (RF) higher than the yield of the 10-year Government bonds.

A Look at the End-of-Life Financial Situation in America

May 21, 2015 Comments off

A Look at the End-of-Life Financial Situation in America
Source: Employee Benefit Research Institute

  • This report takes a comprehensive look at the financial situation of older Americans at the end of their lives. In particular, it documents the percentage of households with a member who recently died with few or no assets. It also documents the income, debt, home-ownership rates, net home equity, and dependency on Social Security for households that experienced a recent death.
  • Significant findings include that among all those who died at ages 85 or above, 20.6 percent had no non-housing assets and 12.2 percent had no assets left. Among singles who died at or above age 85, 24.6 percent had no non-housing assets left and 16.7 percent had no assets left.
  • Data show those who died at earlier ages were generally worse off financially: 29.8 percent of households that lost a member between ages 50 and 64 had no assets left. Households with at least one member who died earlier also had significantly lower income than households with all surviving members.
  • The report shows that among singles who died at ages 85 or above, 9.1 percent had outstanding debt (other than mortgage debt) and the average debt amount for them was $6,368.
  • The report also shows that the importance of Social Security to older households cannot be overstated. For recently deceased singles, it provided at least two-thirds of their household income. Couple households above 75 with deceased members received more than 60 percent of their household income from Social Security.
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