Services Tags: Defined Contribution

Alternatives 101 Video Series

Our Alternatives 101 video series covers each of the major alternatives asset classes, with guidance provided by several of Marquette’s research analysts and directors. In contrast to traditional investments, alternatives investing includes asset classes other than stocks, bonds, and cash (reference our Investing 101 series for more information about traditional investing concepts). This series aims to introduce trustees, staff, and other investors to the key terms and concepts they may encounter when investing in these typically less familiar asset classes.

The series covers:

View each talk in the player below— use the upper-right list icon to access a specific presentation.

For more information, questions, or feedback, please send us an email.

Defined Contribution Plan Legislative Update – 4Q 2019

Since our 2Q 2019 DC Legislative Update, both chambers of Congress have moved forward with legislative enhancements for retirement savings. Under the leadership of Rep. Richard Neal (D-MA), the House has passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). In the Senate, Sen. Charles Grassley (R-IA), Chair of the Senate Finance Committee, formally introduced the most recent version of the Retirement Enhancement and Savings Act (RESA). The bulk of this update discusses the similarities and differences between the two pieces of legislation and what plan sponsors can expect going forward.

In this update, we summarize various pieces of legislation and recent topics of interest for DC plan sponsors:

  • SECURE Act vs. RESA
  • Release of Final Regulations on changes to the hardship withdrawal process by the IRS
  • IRS 2020 401(k) contribution limit increases

Download PDF > 4Q 2019 Defined Contribution Legislative Update

As always, your consultant will be able to address any specific questions you may have regarding these changes. For a broader view of Marquette’s approach to defined contribution consulting, see our previous research including A Roadmap for Defined Contribution Plan Sponsors and Defined Contribution Plans: A Look at the Past, Present & Future.

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Private Equity Position Paper – 2019 Update

This position paper explores the fundamentals of private equity as an asset class. Particularly, we examine the subcategories of venture capital, growth equity, buyout, direct lending/ mezzanine debt, and distressed, and the investment styles within them; mechanics of investing in private equity including fund structure, commitment period, cash flow, and the J-curve; investor fees and performance; and recent trends. Recommendations and guidance towards the investment manager search process and making an allocation to the asset class are also included.

Download PDF > Private Equity Position Paper

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

ESG in Defined Contribution Views Featured in Benefits Magazine

An article by Marquette investment consultant Linsey Schoemehl Payne and analyst Courtney Hugger was featured in the September 2017 edition of Benefits Magazine. The article, Getting Started With ESG: Six Steps for Defined Contribution Plans, explores the growing interest among defined contribution (DC) plan sponsors in incorporating consideration of environmental, social and governance (ESG) issues into their plans. Linsey and Courtney suggest six steps for implementing ESG strategies, summarizing their recent white paper Bracing for Impact: How to Prepare for the Next Generation of Defined Contribution Plans. Their ESG in DC views were also presented in the webinar ESG Stewardship for Defined Contribution Plan Fiduciaries.

In recent years, defined contribution plan sponsors have adopted features such as automatic enrollment to increase participation and options including target-date funds to better prepare participants for retirement. Consideration of ESG issues — that’s environmental, social and governance issues — within the participant-directed DC plan structure also has gained momentum as a way for plan sponsors to engage with their participants and mitigate risks for the investor. Plan sponsors are now tasked with the challenge of determining whether and how best to incorporate ESG considerations into the stewardship of DC plans.

Linsey Schoemehl Payne is a vice president for Marquette Associates. She is a member of the firm’s impact investing committee and discretionary committee. She was formerly the general counsel and chief compliance officer for the Illinois State Board of Investment. She has a B.A. degree in political science from the University of Missouri–Columbia, a J.D. degree from the DePaul University College of Law and an M.B.A. degree from the University of Chicago Booth School of Business.

Courtney Hugger is a client analyst for Marquette Associates. She is vice chair of the firm’s impact investing and endowment and foundation services committee and serves on the firm’s defined contribution services committee. She has a B.S. degree in public and nonprofit management from Indiana University, Bloomington and earned an M.S. degree in policy studies from the DePaul University School of Public Service.

Benefits Magazine, the monthly publication of the International Foundation of Employee Benefit Plans, covers benefit issues affecting multiemployer, single employer and public employee plan representatives.

Download PDF >

Third Quarter Review of Asset Allocation: Risks and Opportunities

The third quarter saw mixed results for financial markets. Economic fundamentals generally remain strong but signs of deterioration are starting to emerge. Unemployment currently hovers around 3.5%, and inflation is near the Fed’s target of 2%. However, 3Q GDP growth was under 2% (though the 1.9% figure exceeded the 1.7% estimate), and the PMI index has been below 50 since August (a reading under 50 is indicative of contraction in the manufacturing sector). Overall, the most important global trends we see are the following:

  • The U.S.-China trade conflict continues to weigh heavily on both countries as talks remain ongoing;
  • The Federal Reserve (“Fed”) reversed course by cutting interest rates and further cuts are still possible;
  • The U.S. Treasury yield curve inverted briefly, which historically has signaled a recession over the subsequent 12–24 months;
  • Brexit negotiations were extended to January 31, 2020, therefore further perpetuating the uncertainty around the UK’s exit from the EU;
  • Negative interest rates continue to grow in prevalence around the world.

The impact of these shifting dynamics is explored further in this newsletter as we review third quarter performance and expectations going forward for each of the major asset classes.

Read > Third Quarter Review of Asset Allocation: Risks and Opportunities

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

A New “FronTier” in Retirement

Historically, few plan sponsors have emphasized the retention of retirees in plans, but over recent years, plan sponsors have been dedicating more conversations and efforts into doing just that. We’ve seen this trend prove out as progressively more assets over the past three years from participants 65+ are kept in plans, as shown in this week’s chart. Plan sponsors began prioritizing retiree retainment due to a few developments, but most importantly because the large asset balances of retirees can provide better pricing leverage for the plan as a whole. This benefit is mutual in that retirees will likely get better pricing within the plans than they would as individuals.

To better serve retirees, plans are increasingly discussing the “retirement tier” of the DC plan which would consist of products only available to those nearing or at retirement. Products aiming to provide better retirement solutions have expanded notably over the past few years, largely focused on addressing the issue of retirees taking a large lump sum withdrawal at retirement age. Instead, new products allow retirees to receive regular payments ­— similar to paychecks — while the underlying principal (i.e., their “nest egg”) remains invested and grows with the market. Many of these are labeled “retirement income” products and offer retirees better liquidity options that are easy to understand. Typically, the funds target a certain amount of risk in order to distribute a specified percentage of assets — usually 2–5% — to the retiree at regular intervals throughout the year.

While the concept seems simple enough, these products initially faced slow adoption due to several factors including cost, recordkeeping constraints, lack of portability between plans, and lack of regulatory guidance. However, as the industry continues to leverage technology to address these challenges and expand its capabilities, the tool kit is expanding for plan sponsors to provide participants flexibility in their retirement planning; this is particularly important for those near or in retirement which brings an increased dispersion of personal situations, savings, and spending goals. As the DC industry grows in size and in complexity, Marquette will remain abreast of retirement income innovation to better guide plan sponsors as they provide retirement solutions for their participants.

Print PDF > A New “FronTier” in Retirement

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

 

3Q 2019 Market Briefing

Live Webinar – Thursday, October 24, 2019 – 1:00-2:00 PM CT


Please join Marquette’s asset class analysts for a live webinar based on our 3Q 2019 Market Environment. This webinar series is designed to brief clients on the market as soon as possible after quarterly market data becomes available.

The overall U.S. economy will be discussed, along with fixed income, U.S./non-U.S. equity, hedge funds, private equity, real estate and infrastructure.

Featuring:
Greg Leonberger, FSA, EA, MAAA, Partner, Director of Research
Jeffrey Hoffmeyer, CFA, Lead Analyst, Asset Allocation
Ben Mohr, CFA, Director of Fixed Income
Samantha Grant, CFA, CAIA, Senior Research Analyst, U.S. Equities
David Hernandez, CFA, Senior Research Analyst, Non-U.S. Equities
Joe McGuane, CFA, Senior Research Analyst, Alternatives
Jeremy Zirin, CAIA, Senior Research Analyst, Real Assets
Brett Graffy, CAIA, Research Analyst

Who should attend: Institutional investment stewards, private clients, investment managers

Live webinar attendees will be able to submit questions to the presenters and vote in audience polls during the event. Questions will be answered during the final 15 minutes of the webinar, as time allows.

If you are unable to attend the webinar live, you can also view it afterward on demand. Registrants will automatically receive a follow-up email shortly after the end of the webinar to notify them of webinar recording availability

Kweku Obed Contributed Two Chapters to Latest IFEBP Trustee Handbook

Marquette investment consultant Kweku Obed contributed two chapters to the eighth edition of the International Foundation of Employee Benefit Plans’ Trustee Handbook: A Guide to Labor-Management Employee Benefit Plans. Chapter 30 compares defined contribution, hybrid and defined benefit plans. Chapter 38 covers investment fundamentals. Written by more than 50 industry experts, the publication provides practical advice and guidelines for both new and experienced trustees of Taft-Hartley plans.

For more information, please visit the IFEBP website.

Catastrophe Bonds

Institutional investors are constantly searching for additional asset classes that may help diversify a portfolio and enhance returns. Catastrophe (“cat”) bonds may be such an asset class that could help diversify a portfolio’s interest rate, credit/equity and currency risk by providing non-correlating natural event risk. Cat bonds are typically issued by insurance companies that pool property and casualty policies. They pay coupons to the bondholder using the policy premiums received. When a natural event occurs — such as a hurricane or an earthquake — part of the principal of a cat bond may be used to pay the insurance claims on the pool of policies. In other words, the investor is paid to assume a part of the risk associated with natural events. Historically, cat bonds average 5% to 10% return annually.

This paper discusses the benefits of cat bonds and the mechanics of how they work, along with their market size. The characteristics of cat bonds and the types of cat bond strategies will also be examined. The paper will provide details about cat bonds’ merits and risks to help investors make informed decisions about whether to consider this asset class. It will conclude with a discussion of recent and long-term performance.

Read > Catastrophe Bonds White Paper

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

 

Investing 101 Video Series

Our Investing 101 video series covers the fundamentals of investing. This series aims to create a knowledge base for trustees, staff, and other investors of the key terms and concepts that they encounter most frequently, with guidance provided by several of Marquette’s research analysts and directors.

The series covers:

Marquette encourages open dialogue with our consultants and research team. For more information, questions, or feedback, please send us an email.