New Members of Vita Planning Group
Our team has grown, and we are excited to announce the addition of two high-caliber team members. Please meet Julia Grandi-Hill and Tim Gallagher!
Julia joined the team in February as a Planning Specialist, assisting with customized retirement plan design, daily fund monitoring and oversight, comprehensive annual plan reviews, ongoing support to plan participants, and supporting the team in any way needed. She has a BA in Organizational Communications with a minor in Business Management from California State University, Chico. Her background of organization and critical-thinking allow her to provide high-quality service to our clients.
Tim joined the team in May as a Retirement Plan Advisor and brings over 15 years of experience in Financial Services. Tim focuses on participant education, day to day operational matters, and investment oversight. Tim holds a BA in Business Economics and an MBA. Tim earned the Chartered Retirement Planning Counselor, CRPC and Accredited Asset Management Specialist, AAMS designations at the College for Financial Planning. Tim successfully completed Level 1 of the Certified Equity Professional designation at Santa Clara University and has the series 7, 63, and 65 securities licenses.
It’s 5500 Time!
A friendly reminder that for calendar year plans, the Form 5500 and Form 8955-SSA (if applicable) must be filed by July 31, unless an application for extension has already been submitted. In most cases, the extension will be automatically prepared and filed by your retirement plan service provider on your behalf. If you are unsure as to the status of your Plan’s Form 5500 or Form 8955-SSA, you are invited to contact our team for assistance.
View our online Compliance Calendar to see other important administrative tasks.
Empower Retirement Revamps their Website and Mobile App
For those of you who use Empower Retirement Services as your recordkeeper, you have already been or will soon be, transitioned to an upgraded website and mobile platform for both plan administration and participants. Empower’s new site features enhanced planning capabilities and interactive calculators for your participants to plan their retirement savings, and manage their account and investments. Please contact us if you or any of your participants have questions about the new site.
International Markets Coming Back
The biggest story thus far in 2017 has been the resurgence of overseas equity markets. Both overseas emerging market and developed market equities have outpaced US equity markets. In many ways, this is a welcome development. Global economic growth has been underpinned by the US economy since the global financial crisis of 2007/2008. We are now in the 8th year of the US current economic expansion, the second longest on record. So it would not be too surprising to see US economic figures beginning to soften. By contrast, overseas economies have picked up. Europe is recording rising GDP growth, falling rates of unemployment, and increased credit demand. Emerging economies as well have put commodity, credit, and currency concerns behind them, opening the way for more stable economic growth and better returns in US dollar terms.
In the US, the post-election rally in US equities has held up, even in the face of softening economic data and the fading prospect of significant tax reform or infrastructure spending. Q1 2017 US GDP growth was revised up from 0.7% to 1.4%. First quarter GDP numbers are notoriously soft, but the final Q1 figure was less than the 2016 growth rate of 1.6%. Expectations for Q2 2017 GDP growth are somewhat more positive, coming in between 1.5% and 2.0%. Cyclical sectors – vehicle sales, housing starts, inventories – have all decelerated from 2016 levels as pent-up consumer demand coming out of the 2008 recession has largely been met. Capital goods orders remain largely unchanged. US unemployment was 4.4% in June 2017, up slightly from the 4.3% figure recorded in May, the lowest unemployment rate in 16 years. The strong labor market is further evidenced by non-farm payrolls averaging 200K per month, an increase in job ads and a decrease in unemployment benefits paid. Wage growth, however, has fallen behind late 2016 levels and was 2.3% in June. But where the US economy may be showing signs of softening economic growth, overseas economic conditions are looking favorable.
Global GDP grew at an annualized rate of 5.7% in Q1 2017, the best result since 2011. Eurozone GDP grew at 2.3% in Q1 2017 and unemployment continued to fall, registering 9.3% in May 2017. The forward-looking Global Purchasing Managers’ Index stands at 52.6, indicating an acceleration of global manufacturing demand, with the highest figures shown by Germany, Ireland and France at 60, 56 and 54, respectively (the US is at 52). A similar situation exists in emerging market economies. China continues to lead the way with 6.9% annualized GDP growth in Q1 2017. China also made progress in its credit and interest rate markets, with inflation dropping to 1.5% YOY in May down from 2.5% in January. The strengthening of other emerging market currencies against the US dollar is a harbinger for improved overseas returns for US dollar based investors.
For the year to date, overseas equity markets outperformed US markets for the first time since 2012: MSCI Emerging Market Index up 18.6%, MSCI ex-US Developed Market Index up 14.2% vs the US S+P 500 Index up 9.3%. Overseas valuations continue to be attractive with the ex-US equity markets trading at 14.1x forward P/E ratio compared with a 20-year average of 14.7x, as compared to the S+P 500 at 17.5x, 9% above its 20-year average of 16.0x. Except for times of extreme stress, such as the global financial crisis of 2007/2008, overseas equity and fixed income returns have historically been uncorrelated to US markets. This improvement in overseas economic fundamentals should give US investors good opportunities to diversify out of domestic equity and fixed income markets.