PLANADVISER - November/December 2018 - 8

investment focus
R-6 Share Classes Hit $1.5t
The zero/zero class has mushroomed 15% since last year
R
etirement plan litigation focusing
on investment and plan fees-and
often on the practice of revenue
sharing-as well as the now-vacated
fiduciary rule from the Department
of Labor (DOL) and an increase in feebased
advising from retirement plan
advisers, have raised awareness of the
importance of reasonable retirement
plan investment fees. This has resulted
in a growing demand for investments
that allow for fee transparency, plus are
created especially for retirement plans.
Many fund companies have introduced
" retirement, " or R, shares-
explicitly created for retirement plans-
with varying fees. Some of these share
classes allow for bundling of plan costs,
while others, specifically the R6 share
class, are ultra-low cost. Based on the
trends referenced above, it should be
no surprise, then, that these zero/
zero share classes with no embedded
revenue-sharing, service or distribution
expenses continue to grow their
assets at a brisk pace. In the first three
quarters of this year, assets in these
shares, also known as R-6, have risen to
$1.54 trillion-a 15% increase from the
$1.34 trillion they amassed in the same
period last year, according to Strategic
Insight Simfund.
Even more remarkable is that, in the
past five years, zero/zero share class
assets have nearly quadrupled, from
$418 billion in 2013. Net flows surged
last year to $156 billion, up nearly
double from the $72 billion they took in
the year before. Further, there are now
83 managers offering zero/zero share
classes, up from 43 five years ago.
Cerulli predicted two years ago that
zero/zero share classes would continue
to rise in popularity. " Amid a persisting
trend toward lower cost and more
transparent share classes, as well as
the recent DOL conflict of interest rule,
the R6 share, which typically has no
revenue sharing, has witnessed significant
asset growth, " Cerulli said.
-Lee Barney
Total Zero/Zero Assets
Total assets ($b)
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2013
2014
Zero/Zero Net Flows
Net new flows ($b)
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2013
2014
Zero/Zero Managers
Number of managers
90
80
70
60
50
40
30
20
10
2013
2014
Source: Strategic Insight Simfund
2015
2016
2017
YTD 2018
All data as of September 30, 2018
2015
2016
2017
YTD 2018
2015
2016
2017
YTD 2018
8 | planadviser.com November-December 2018

http://www.planadviserdigital.com/planadviser/november_december_2018/TrackLink.action?pageName=8&exitLink=http%3A%2F%2Fplanadviser.com

PLANADVISER - November/December 2018

Table of Contents for the Digital Edition of PLANADVISER - November/December 2018

Weathering Audits
Protection for Your Practice
The Case for Roths
SEC on Rollovers
ERISA Section 409(b)
403(b) Litigation Update
PLANADVISER - November/December 2018 - C1
PLANADVISER - November/December 2018 - FC1
PLANADVISER - November/December 2018 - FC2
PLANADVISER - November/December 2018 - C2
PLANADVISER - November/December 2018 - 1
PLANADVISER - November/December 2018 - 2
PLANADVISER - November/December 2018 - 3
PLANADVISER - November/December 2018 - 4
PLANADVISER - November/December 2018 - 5
PLANADVISER - November/December 2018 - 6
PLANADVISER - November/December 2018 - 7
PLANADVISER - November/December 2018 - 8
PLANADVISER - November/December 2018 - 9
PLANADVISER - November/December 2018 - 10
PLANADVISER - November/December 2018 - 11
PLANADVISER - November/December 2018 - 12
PLANADVISER - November/December 2018 - 13
PLANADVISER - November/December 2018 - 14
PLANADVISER - November/December 2018 - 15
PLANADVISER - November/December 2018 - 16
PLANADVISER - November/December 2018 - 17
PLANADVISER - November/December 2018 - 18
PLANADVISER - November/December 2018 - 19
PLANADVISER - November/December 2018 - 20
PLANADVISER - November/December 2018 - 21
PLANADVISER - November/December 2018 - 22
PLANADVISER - November/December 2018 - 23
PLANADVISER - November/December 2018 - 24
PLANADVISER - November/December 2018 - 25
PLANADVISER - November/December 2018 - 26
PLANADVISER - November/December 2018 - 27
PLANADVISER - November/December 2018 - 28
PLANADVISER - November/December 2018 - 29
PLANADVISER - November/December 2018 - 30
PLANADVISER - November/December 2018 - 31
PLANADVISER - November/December 2018 - 32
PLANADVISER - November/December 2018 - 33
PLANADVISER - November/December 2018 - 34
PLANADVISER - November/December 2018 - 35
PLANADVISER - November/December 2018 - 36
PLANADVISER - November/December 2018 - 37
PLANADVISER - November/December 2018 - Weathering Audits
PLANADVISER - November/December 2018 - 39
PLANADVISER - November/December 2018 - 40
PLANADVISER - November/December 2018 - 41
PLANADVISER - November/December 2018 - Protection for Your Practice
PLANADVISER - November/December 2018 - 43
PLANADVISER - November/December 2018 - The Case for Roths
PLANADVISER - November/December 2018 - 45
PLANADVISER - November/December 2018 - SEC on Rollovers
PLANADVISER - November/December 2018 - ERISA Section 409(b)
PLANADVISER - November/December 2018 - 403(b) Litigation Update
PLANADVISER - November/December 2018 - C3
PLANADVISER - November/December 2018 - C4
https://www.planadviserdigital.com/planadviser/winter_2023
https://www.planadviserdigital.com/planadviser/fall_2023
https://www.planadviserdigital.com/planadviser/summer_2023
https://www.planadviserdigital.com/planadviser/industryleader_2023
https://www.planadviserdigital.com/planadviser/spring_2023
https://www.planadviserdigital.com/planadviser/november_december_2022
https://www.planadviserdigital.com/planadviser/september_october_2022
https://www.planadviserdigital.com/planadviser/july_august_2022
https://www.planadviserdigital.com/planadviser/may_june_2022
https://www.planadviserdigital.com/planadviser/industry_leader_awards_2022
https://www.planadviserdigital.com/planadviser/march_april_2022
https://www.planadviserdigital.com/planadviser/january_february_2022
https://www.planadviserdigital.com/planadviser/november_december_2021
https://www.planadviserdigital.com/planadviser/september_october_2021
https://www.planadviserdigital.com/planadviser/july_august_2021
https://www.planadviserdigital.com/planadviser/may_june_2021
https://www.planadviserdigital.com/planadviser/march_april_2021
https://www.planadviserdigital.com/planadviser/january_february_2021
https://www.planadviserdigital.com/planadviser/november_december_2020
https://www.planadviserdigital.com/planadviser/september_october_2020
https://www.planadviserdigital.com/planadviser/july_august_2020
https://www.planadviserdigital.com/planadviser/may_june_2020
https://www.planadviserdigital.com/planadviser/march_april_2020
https://www.planadviserdigital.com/planadviser/january_february_2020
https://www.planadviserdigital.com/planadviser/november_december_2019
https://www.planadviserdigital.com/planadviser/september_october_2019
https://www.planadviserdigital.com/planadviser/july_august_2019
https://www.planadviserdigital.com/planadviser/may_june_2019
https://www.planadviserdigital.com/planadviser/march_april_2019
https://www.planadviserdigital.com/planadviser/january_february_2019
https://www.planadviserdigital.com/planadviser/november_december_2018
https://www.planadviserdigital.com/planadviser/september_october_2018
https://www.planadviserdigital.com/planadviser/july_august_2018
https://www.planadviserdigital.com/planadviser/may_june_2018
https://www.planadviserdigital.com/planadviser/march_april_2018
https://www.planadviserdigital.com/planadviser/january_february_2018
https://www.planadviserdigital.com/planadviser/november_december_2017
https://www.planadviserdigital.com/planadviser/september_october_2017
https://www.planadviserdigital.com/planadviser/july_august_2017
https://www.nxtbookmedia.com