Archive for 'September 2014'

    SIMPLE IRAs: Answers to Frequently Asked Questions

    September 25, 2014 3:08 PM by Brian Dobbis

    As the deadline approaches for small businesses to establish SIMPLE IRAs in 2014, here are answers to some of the top questions from plan sponsors and advisors.


    SIMPLE IRAs are low-cost, hassle-free retirement plans for small-business owners who have fewer than 100 employees, and who don’t sponsor any other qualified retirement plans. With the deadline for establishing a SIMPLE plan in 2014 approaching, I thought it might be a good idea to answer some of the questions I am asked most often by financial advisors.

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    Has the "Internet of Things" Been Overhyped?

    September 23, 2014 12:52 PM by Lord Abbett Editorial Staff

    While few doubt the Internet of Things (IoT) will unleash a new wave of economic growth, the questions now are how much will we spend on building IoT capabilities, over what time frame, and which ecosystems gain (or lose) from this.

    Spawned by the build-out of wireless networking, cloud computing, and Big Data, along with the proliferation of smartphones, the Internet of things (IoT) connects everyday objects so they can sense and communicate with other operating systems, allowing them to be monitored and controlled from anywhere. But some widely publicized projections of its market potential may be over-optimistic, at least with respect to the timing of when we will experience mass adoption of IoT across major sectors.

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    Alibaba Debuts in a Bustling IPO Bazaar

    September 22, 2014 3:27 PM by Lord Abbett Editorial Staff

    The initial public offering market has heated up. What are the implications for active equity managers?

    If ever there were an initial public offering (IPO) that underscores the market's search for growth in a slow-growth economic environment, the September 19th debut of China's leading e-commerce company likely would be it.

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    SIMPLE IRAs Versus 401(k) Plans: Options for Small Businesses

    September 19, 2014 4:15 PM by Brian Dobbis

    There are multiple retirement plan options for small-plan sponsors. We offer an easy-to-use, apples-to-apples comparison of the two most popular plans.


    Small-business owners who are thinking about establishing a retirement savings plan for their workers are right to focus on considerations such as choice, variety, and flexibility.  There are numerous retirement plans available to small-business owners, but the two most popular are SIMPLE IRAs, which are available to employers with 100 or fewer workers, and 401(k) plans.  Choosing the right plan for you or your client involves making some important decisions. Determining which plan will be more effective for a small business and its workers depends upon the size of the company, employee demographics, plan objectives, and employers’ goals, among other things. 

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    The Fed: Uncertainty Rules

    September 18, 2014 2:10 PM by Timothy Paulson

    Welcome to the post–QE world. 

    Not since September 2013 have investors been as focused on, and uncertain about, a statement from Federal Reserve policymakers as they were for the one released on September 17, 2014. As it turns out, the policy-setting arm of the Fed, the Federal Open Market Committee (FOMC), did not explicitly set a timetable as to when it would begin to raise interest rates (it retained the now-famous “considerable time” reference). Nonetheless, the market is keenly aware that a rate hike is still in the cards.

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    Fed Policy: Time for a Change?

    September 15, 2014 2:00 PM by Zane Brown

    Improving economic data, along with recent statements from Federal Reserve officials, suggest that policymakers may alter their stance on the timing of a rate hike.

    The Federal Reserve may have to change its longstanding monetary policy boilerplate based on recent economic releases, increases in both commercial and consumer lending, and statements from several members of the Fed’s policy-setting arm, the Federal Reserve Open Market Committee (FOMC). These factors combine to suggest that the Fed, at its meeting on September 16–17, may alter its language from recent policy statements stating that it “likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time” after the end of the Fed’s quantitative easing (QE) program.

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    SIMPLE IRAs Simplify Saving for Small Sponsors

    September 12, 2014 1:30 PM by Brian Dobbis

    Low costs, flexibility, and, yes, simplicity, make SIMPLE IRAs a popular choice for small-business owners who want to help their workers and themselves save for retirement.


    Given the multitude of retirement-savings options available to small employers and their workers, guiding business owners in selecting the appropriate employer-sponsored retirement plan can be daunting.

    Often, advisors would do well to start by looking at a SIMPLE IRA for a small-business owner and or sole proprietor. SIMPLE IRAs serve as a great starter plan, offering an easy and low-cost solution for businesses with 100 employees or fewer.

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    Was the Affordable Care Act a "Bond-Aid"?

    September 10, 2014 10:35 AM by Lord Abbett Editorial Staff

    While the ACA definitely helped stocks, its impact on bonds was actually a mixed bag. Tax-free bonds issued by hospitals have remained attractive.  

    When the U.S. Supreme Court upheld the ACA at the end of 2012, both the Merrill Lynch High-Yield Healthcare Indexand Merrill Lynch Investment-Grade Healthcare Index2 were already trading close to their overall asset class indexes, reflecting those sectors’ generally perceived defensive characteristics.

    According to Lord Abbett Research Analyst Bill Carpenter, both of those healthcare indexes have modestly underperformed the Merrill Lynch High Yield Master II Index3 and Merrill Lynch U.S. Corporate Master (A) Index4, respectively, ever since for that reason—and because of the combination of the low interest-rate environment and the availability of other better-yielding sectors within the respective corporate universes. Thus, most of the overall healthcare sector’s volatility (both positive and negative) has been reflected in stock prices rather than bond prices.

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    IRAs: 10 SIMPLE Questions for Small Employers

    September 5, 2014 4:38 PM by Brian Dobbis

    Here's what small businesses and self-employed individuals need to know to establish these hassle-free, low-cost retirement plans for their employees.


    Autumn is right around the corner—and with its arrival come some crucial IRA deadlines. At the top of the list is the October 1st cutoff date for employers to establish a SIMPLE IRA plan effective for 2014. A SIMPLE IRA plan set up after October 1, 2014, would not take effect until January 1, 2015, at the earliest. 

    It is no coincidence, then, that the number of questions about SIMPLE plans I’ve been receiving has increased as October approaches. In an effort to answer the most common queries—and clear up some misconceptions along the way—the next series of posts in “The Road to Retirement” will focus on SIMPLE IRAs.

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    Puerto Rico, One Year Later

    September 5, 2014 1:45 PM by Daniel S. Solender, CFA

    The commonwealth is not out of the woods, but "ring-fencing" may offer bondholders some protections.

    Although Puerto Rico has been facing fiscal issues for many years, an article published one year ago in Barron’s (“Troubling Winds,” August 26, 2013) made the issues more widely known. This spotlight led to increased municipal bond mutual fund redemptions last year, which caused prices on Puerto Rico bonds to drop, leading to concerns about the commonwealth’s ability to finance itself. Puerto Rico’s credit ratings also were downgraded, but this occurred well after the market had mostly priced in the concerns.

    So, how does Puerto Rico look today?

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    Taking Health Care of Your Investments

    September 4, 2014 10:53 AM by Lord Abbett Editorial Staff

    Long considered defensive, the healthcare sector has been one of the best performing sectors of late. How sustainable is this trend?

    In an article that might rile detractors of the Affordable Care Act (ACA), three business professors recently extolled the long-term benefits of investing in the healthcare industry, especially now that national healthcare spending since 2013 is expected to grow faster than the overall economy through 2020, regardless of legislative changes.

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    Multiple Asset Classes, Multiple Opportunities

    September 2, 2014 3:05 PM by Brian Dobbis

    Investing in multi-asset-class funds can simplify the process of deciding where to allocate retirement savings. 


    Diversifying assets with the intent of reducing risks has been a common practice throughout history. In 1705, the fictional Sancho Panza cautioned an impatient Don Quixote: “It is the part of a wise man to keep himself today for tomorrow and not venture all his eggs in one basket.”  Although Sancho Panza was not thinking about an imaginary investment portfolio at the time, his advice has become a standard warning against concentrating one’s wealth too narrowly and, thereby, risking the loss of it all.

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