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COLLECTED WISDOM™ on Exchange Traded Funds in 401k Plans

Exchange-traded funds (ETFs) have seen strong growth in the 401k market recently. We have started this collection of articles to help you understand and work throught the subject.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

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ETFs: Coming Soon to 401k Plans

Abstract: Many 401k plans have been slowly moving towards lower-cost investment alternatives -- such as exchange-traded funds -- over the past few years, but the fiduciary rule may shift this movement into high gear.

Source: Investopedia.com, November 2016

Some Big Names Voice Caution on ETF Use in DC Plans

Abstract: Some big names in the retirement industry are skeptical about the use of exchange-traded funds by big defined contribution plans or even midsized plans.

Source: Pionline.com, September 2016

Lower Fees Drive Demand for ETFs in 401k Plans

Abstract: Plan sponsors are consolidating their investment menus to reduce cost, which should be giving DC investment managers cause for concern. Nearly two-thirds (65%) of plan sponsors point to investment fees as one of the primary factors they find most challenging to manage. Amidst the heightened attention on fees and expenses, there is an increasing interest in ETFs, especially among larger plans which tend to be trend setters in the industry.

Source: Marketstrategies.com, July 2016

ETFs and Defined Contribution Plans

Abstract: This 7-page paper's self-described objective is to provide a high level perspective on why ETFs are not more broadly held in retirement plans, and to summarize solutions developed to address the issue. It was written with ETF stakeholders in mind.

Source: Vmsholdings.com, June 2016

Will ETFs Happen in 401k Plans?

Abstract: It's a question that's getting attention of late, but the answer is always the same. "Not as a stand-alone product," Todd Cassler, president of institutional distribution with John Hancock Investments, bluntly stated at a recent conference.

Source: 401kspecialistmag.com, February 2016

ETFs Non-Player in 401ks, CITs Gaining Attention

Abstract: A recent Cerulli survey shows more ETF sponsors are focusing distribution efforts on small- and mid-sized defined contribution plans. While Collective Investment Trusts are gaining more attention overall in the industry.

Source: 401khelpcenter.com, October 2015

ETFs in Times of Extreme Stress

Abstract: As investors reeled from big market gyrations in August, some holders of ETFs were startled by the sharp difference between the price of their equity ETF shares and the value of the underlying stocks. That's according to an article recently published in The Wall Street Journal that looks at the behavior of ETFs on Aug. 24, the day the S&P 500 plunged 3.9%.

Source: Benefitscanada.com, September 2015

Is the 401k Market Finally Ready for ETFs?

Abstract: The explosion in ETF's popularity has yet to influence the DC market, but increasing scrutiny of fees may make ETFs naturally attractive to advisors and investors. Some believe the wider adoption of ETFs in 401k plans could be in the offing.

Source: Benefitspro.com, May 2015

Why Aren't More Plan Sponsors Using ETFs?

Abstract: The institutional use of ETFs has grown exponentially and the spectrum of products they're turning to is also shifting. The upward trend certainly extends to the pension space, but they still haven't wholeheartedly embraced ETFs, particularly on the DC side. The question is, why?

Source: Benefitscanada.com, April 2015

Are ETFs and Self-Directed Brokerage Accounts Available in 403(b) Plans?

Abstract: The answer to the question posed in the title is "maybe." Article looks at how these type of accounts might work in a 403(b) plan and specific challenges that they bring.

Source: Ntsa-net.org, January 2015

Should You Offer ETFs in Your DC Plan?

Abstract: With indexing becoming more popular in defined contribution plans, it's only natural that plan sponsors should consider whether it makes sense to offer indexing through exchange-traded funds rather than through traditional investment vehicles like funds or trusts. But despite the low-cost indexing that ETFs generally make available, ETFs aren't typically the best option for most plans according to Vanguard Investment Strategy Group.

Source: Vanguard.com, June 2014

Provider Trends and the Future of ETF-only 401k Plans

Abstract: Given that there are more than 600,000 small 401k plans that present plan advisors with many bite-sized opportunities to gather assets, along with an opportunity to rub elbows with well-heeled professionals, it should not come as a surprise if the 401k ETF-only market takes off over the next few years in the small to mid-markets.

Source: Napa-net.org, June 2014

The Debate Over ETFs in 401k Plans

Abstract: Exchange-traded funds are one of the fastest-growing segments of the financial services industry. But they have been very slow to catch on with retirement plans. Some industry insiders believe retirement plan providers have been slow to include exchange-traded funds in 401k plans because, unlike mutual funds, ETFs don't offer revenue sharing as do mutual funds.

Source: Institutionalinvestor.com, April 2014

Top ETFs in America's 401k Plans -- 2013

Abstract: ETFs, in terms of their distribution in 401k plans, have increased in prevalence over the past couple of years as plan sponsors begin to better understand the benefits of including them on plan menus. Here is a list of the the Top 20 Exchange-Traded Funds Distribution for the 401k and defined contribution industry.

Source: Brightscope.com, September 2013

ETF's in 401k Plans

Abstract: Exchange-traded funds have grown increasingly popular in recent years. However, while certain ETF features may appeal to some investors, in Fidelity's perspective here, there are qualities that plan sponsors should keep in mind when considering making them available within their defined contribution plans.

Source: Fidelity.com, June 2013

Cogent: Interest Growing for ETFs in 401k's

Abstract: The world of 401ks appears interested in making changes in the coming year in investment options in various investment plans, according to a study by Cogent Research. This is a Q&A with Linda York, an executive at Cogent and the author of "The DC Investment Manager Brandscape" report.

Source: Indexuniverse.com, June 2013

An ETF Due Diligence Checklist

Abstract: Knowing what you own is an important investment principle regardless of whether you are buying a security, mutual fund or ETF. Using this worksheet to create a thorough framework for your analysis can help ensure the ETFs you choose best meet your clients' needs.

Source: State Street Global Advisors, October 2012

The Case for ETFs in 401k Plans

Abstract: ETFs clearly have a long way to go become a force in the 401k universe, but investors in small 401k plans that are often subject to higher fees might make this dream a reality for ETF sponsors.

Source: NASDAQ, October 2012

Heavyweight ETF Providers Lobbying for 401k Inroads

Abstract: Exchange traded fund providers have banded together to lobby and gain market share within the huge 401k plan industry. The retirement business is one of the areas that ETF firms have been trying to break into, touting lower fees as a selling point.

Source: ETFtrends.com, August 2012

Global ETF Industry Enters its Next Phase of Development

Abstract: Global ETF assets under management have doubled in the last five years, as has the number of products available. While growth in the more mature ETF markets is likely to slow in the medium term, new products will continue to be added to an increasingly diverse and sophisticated ETF line-up.

Source: 401khelpcenter.com, August 2012

Apple Leading Charge in All-ETF 401k Plans

Abstract: Apple is not just an innovator in the technology sector, but it's also an innovator in how it manages its company sponsored 401k retirement plan. The firm now has the bulk of its 401k assets in ETFs.

Source: NASDAQ, March 2012

Are ETFs the Right Thing for a 401k?

Abstract: As exchange-traded funds become more popular, many wonder whether or not these investments are too risky. Because of the way they are set up, most investors can day trade within their ETF accounts. Many question whether that is a good idea, especially for those ETF funds included in 401k plans.

Source: Benefitspro.com, July 2012

Examining Exchange-Traded Funds

Abstract: Exchange-traded funds (ETFs) have seen explosive growth since their introduction to the U.S. market in 1993. Although hugely popular, these investment products are not well understood by most investors. What are ETFs really, and how do they work? This white paper reviews the history and construction of ETFs, and explore in depth the potential risks and advantages of exchange-traded funds.

Source: Arnerich Massena, April 2012

A Push for ETF's in 401k Plans

Abstract: While individual investors embrace exchange-traded funds, most 401ks savings plans give them the cold shoulder. An interview with Neil Plein, vice president of Invest n Retire, who is on a mission to change that.

Source: Bloomberg, March 2012


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