Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

4 Morningstar CEO Kunal Kapoor believes that as companies have shifted from traditional pensions to 401(k)-style plans, workers have become increasingly anxious about their quality of life after they retire. To help allay those concerns, there's a need to combine the flexibility of a 401(k) with the best elements of traditional pensions, he says. In this commentary, Kapoor outlines some areas that Morningstar would like to see addressed.

"We believe we need to keep the momentum going, and there is a lot of room for improvement… So, how can we effect positive change for future American retirees? At Morningstar, through decades of research and advocacy for individual investors, we have come to four conclusions for policymakers, regardless of the specifics of any new retirement proposal."

5 Reasonable minds could argue that U.S. stocks' valuations are getting a bit stretched as they enter their ninth year of gains. But international equities have not put up such strong gains, leading some experts to be more sanguine about the prospects of foreign stocks vis-a-vis their U.S. counterparts. If you're thinking of augmenting or adding foreign-stock exposure to your portfolio, you may want to consider these five medalist exchange-traded funds, which feature low costs and track sensibly constructed indexes.

1.6% The European Commission issued some upgrades to GDP forecasts. Director of economic analysis Bob Johnson find the numbers encouraging, but notes that Brexit and elections still loom.

"[The European Commission] are thinking that the growth in 2017 will now be something like 1.6% instead of their previous thought of 1.5%, and we'll see something like 1.8% in 2018. So, that's in the actual eurozone itself. What's interesting also is we got the data the previous week before that on the European growth GDP in, was 0.5 of a percent in Q4 and for the full year, it was 1.7%. Now, what's intriguing about that 1.7% is the growth in the U.S. was 1.6% over that same period."

7 TRAPPIST-1, a red dwarf that is "just barely big enough to be considered a star," according to Astronomy magazine, has seven Earth-size planets orbiting it. The star, which is similar in size to Jupiter, was originally thought to have only three planets in orbit. Interestingly, scientists believe the planets have the potential to be habitable.

"All of them seem to be in the habitable zone of TRAPPIST-1. That means that they could, under the right conditions, sustain surface water, but there's no proof that any of the planets do. For instance, in our solar system Venus and Mars are in the habitable zone, but both are fairly inhospitable in our present time."

31% When, if ever, does it make sense to own life insurance in retirement? Morningstar cotributor Mark Miller explores that question. He says life insurance can play a role in mitigating longevity risk (that you will outlive your assets).

"Men who reach age 65 can be expected to live to an average age of 86.6, and women to 88.8. But those figures are only averages. A 65-year-old man in good health has a 13% chance to live to 95, as do 21% of women, according to research by Vickie Bajtelsmit, a professor of finance at Colorado State University whose research focuses on retirement and financial planning. And there's a 31% chance that a surviving spouse will make it to 100, she calculates."

4 The large-growth category was the worst-performing diversified domestic-stock category in 2016, with the average fund gaining just 3.2%. It's also the category that has seen the most outflows, says Katie Reichart: $107 billion left large-growth funds during the trailing year through January 2017. For those willing to stick with large growth, Reichart discusses four notable Medalist funds that can help diversify a value-oriented portfolio.

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