Some experts today argue that the world has entered a “New Normal” condition in which stocks have permanently lost their return edge. We’ve heard this before. It was wrong then, and we think it’s wrong now, too.
Individual and institutional investors alike have been shifting their capital from stocks to cash and bonds at a rapid rate in recent years, despite extraordinarily low interest rates. But if investors stop to weigh the importance of two different types of risk, they’ll see they still need stocks.
Risk is unusually high these days. Investors can either be paralyzed by uncertainty…or seize the long-term opportunities that volatility creates. We believe the key to choosing the latter path is updating five long-standing investing precepts for today’s tough times. (more…)
The federal government wants to make it easier for employers to offer lifetime income solutions in retirement plans. My colleague, Mark Fortier, offers an interesting approach to doing so. (more…)
The US Department of Labor’s new fee-disclosure rules for defined contribution (DC) plans will provide participants with much more information on plan and investment-option fees. That’s good. But there’s a real risk that it may unintentionally drive participants toward making poor investment decisions, as my colleagues Mark Fortier and Daniel Notto explain below.
This spring and early summer will be a busy time for US defined contribution plan sponsors and providers, but to a good end: greater clarity on services and fees.
The extraordinary market volatility and poor equity returns of recent years—as well as fears about the macroeconomic outlook—have prompted many investors to contemplate de-risking their overall portfolios. Perhaps they should—but first, they should contemplate the return side of the equation.
If there’s one thing you know about capital-market forecasts, it’s that they’re usually wrong. So why bother forecasting—or paying attention to forecasts? (more…)
Two-thirds of US defined contribution (DC) plan participants say that a secure retirement income stream is the most important feature they’re looking for, as we noted in our seventh annual survey report. But US workers rarely convert their retirement savings to lifetime income by purchasing a traditional fixed annuity. What’s standing in the way?
Target-date funds have gained strong approval among US defined contribution (DC) plan participants who use them, as I have written before. But results from our seventh annual survey suggest that many US DC plan participants still have some mistaken notions about what target-date funds are…and are not. (more…)