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View More Press Releases by BenefitStreet, Inc.

Press release:

New BenefitStreet 401(k) Platform to Combine Exchange Traded Funds and Mutual Funds

Issued by: BenefitStreet, Inc.

Date: Sept. 19, 2007

New Retirement Plan Solution Encourages Low-Fee ETF and Index Mutual Fund Investment Decisions While Offering Full Range of Choices

SAN RAMON, Calif., September 18, 2007 --  BenefitStreet Inc., a pioneer in creating solutions for corporate benefits, today announced a new 401(k) platform that will enable investors to choose both exchange traded funds and mutual funds in the same plan.

Exchange trade funds (ETFs), which track market indices and trade like securities through an exchange, typically carry much lower expenses than mutual funds, including index mutual funds. According to the Investment Company Institute (ICI), as of July 2007, assets of all ETFs totaled $488.83 billion, up 40.3 percent over the past 12 months. Currently a small percentage of these total assets, ETFs in the 401(k) market are projected to grow alongside the micro, small and mid-size plan markets between 7% and 10% annually through 2011.

“Participants in 401(k) plans can now seek a low-fee market rate of return using ETFs while still having the choice to invest in the traditional mutual funds they believe will help add value to their accounts,” said Jim Drury, CEO of BenefitStreet. “We believe this element of choice will empower individual investors to choose the investment approach that makes the most sense for their retirement goals.”

Traditional 401(k) recordkeeping systems were designed to allow small, incremental investments in mutual funds and other products that do not trade in whole shares on an exchange. BenefitStreet’s recent introduction of its ETF-only 401(k) platform addressed this technology issue to enable direct, incremental investments in ETFs. The platform aggregates ETF orders across all Plan Sponsors and places trades at the fund level to reduce trading costs at the participant level to a fraction of a penny.

Even with the recent excitement and significant growth in the ETF market, some Plan Sponsors have been reluctant to take away the mutual fund choices that participants are familiar with using in their retirement plans. Now, by incorporating mutual funds into the ETF 401(k) offering, BenefitStreet is addressing this concern.

“Rather that having to choose one or the other, we’re excited to see BenefitStreet’s ability to combine ETFs and mutual funds in the same plan offering,” said Tim Nihill, Manager of Retirement Products & Services at Boston-based Commonwealth Financial Network. “The original ETF 401(k) plan’s only barrier to entry for a number of our corporate clients was that it took away the ability to also invest in mutual funds. We believe, however, that most participants will find the ETF portfolios very appealing once they see how lower fees can positively impact long-term performance.”

ETFs can provide a well-diversified portfolio with lower management fees than other investment alternatives in retirement plans. Michael Latham, Head of Americas, iShares, the largest ETF provider, said, “The availability of iShares in BenefitStreet’s ETF 401(k) platform comes at a time of increased scrutiny over the transparency of fees associated with 401(k) plans. ETFs, with their lower average cost and greater transparency, should become a core part of the 401(k) market just as mutual funds did over the past 15 years.”

The new platform is now available to Plan Sponsors and Independent Advisors to incorporate a full range of 401(k) investment vehicles, including index-tracking ETFs, index mutual funds and actively managed mutual funds.

“The new platform removes the road blocks that kept 401(k) participants from having access to ETFs,” said Drury. “Participants in 401(k) plans should have every investment opportunity open to them, and we believe it is the fiduciary responsibility of Plan Sponsors to ensure that choice.”

About BenefitStreet

BenefitStreet is a pioneer in the creation and delivery of innovative solutions for corporate benefits, and is constantly improving the way corporations provide and manage benefits. The Company delivers on-demand solutions for comprehensive financial services and group benefits management and administration, and is committed to improving the value of benefits to employees while reducing the complexity and cost of offering benefits for businesses, which are often a company’s third largest expense. Founded in 1993, BenefitStreet serves more than 7,100 corporate clients from its headquarters in San Ramon, Calif., and 12 locations throughout the United States.

For more information, please visit www.benefitstreet.com.

View More Press Releases by BenefitStreet, Inc.


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