Investment updates

HealthEquity strives to provide the leading HSA investment options to help you maximize your savings. In our effort to increase fee transparency and reduce overall investment costs, we are improving our mutual fund lineup by eliminating certain offerings. These changes also address new regulations from the US Department of Labor that become effective in April 2017.

Our new investment lineup will offer mutual funds that, as a group, generally charge lower expense ratios than the funds that are being eliminated. The fee rate for the new lineup is 0.40% per year (i.e. 0.033% per month, or 33 cents per month per $1,000 invested). Because expense ratios on the current lineup vary from fund to fund, certain account holders may pay lower overall fees to invest their health savings account assets, while others may experience an increase or no change in such fees.1 Our fund mapping tool breaks down the total cost by fund and helps you see comparable investment options that are available going forward.

This webpage is designed to help investing account holders understand how they might be affected by changes to investments, and includes the following resources:

  • A timeline of key dates
  • Instructions for determining if your current investments are affected by this change and instructions for potential next steps depending on how you currently invest (see the questions below)
  • A fund mapping tool that will help you identify available investment options that are comparable to your current funds
  • Other helpful documents and resources for current and future investors

Key dates

Week of December 12, 2016 First notification is sent to members
Week of February 13, 2017 Reminder notification is sent to members
On or around April 1, 2017 Advisor Auto Pilot members will be automatically re-invested
April 1, 2017 Identified mutual funds will be closed to new investment and HealthEquity will no longer monitor these funds

Potential next steps

To understand if your specific investment options are affected by this change, simply log in to the HealthEquity member portal and navigate to the investment desktop by selecting ‘Investments’ from the ‘My Account’ menu. Investments that are being eliminated will include [CLOSING] next to the fund name.

If none of the funds listed in your portfolio display [CLOSING], the funds you have chosen are not being closed to new investment. If your funds are being closed, see the chart below for information about potential next steps.

Question 1:

Do you invest in ADVISOR powered by HealthEquity Advisors, LLC?

Question 2:

Are you enrolled in Auto Pilot?

Question 2:

Do you have an automatic investment enabled?

Disclosures

1Additional Information Regarding New Investment Lineup and Associated Fees
As of the date of this writing, our current investment lineup is comprised of two categories of mutual funds: “[Category 1 Funds]” and “[Category 2 Funds].” Generally speaking, the Category 1 Funds consist of passively-managed mutual funds, and the Category 2 Funds consist of actively-managed mutual funds. The Category 1 Funds generally charge investors lower overall expense ratios than those charged by the Category 2 Funds. The updates to our investment lineup will result in the elimination of all Category 2 Funds, all of which, effective April 1, 2017, will be deemed Closed Funds.
HealthEquity currently receives, and will in the future receive, certain administration fees in connection with account holders’ investments. All administration fees in respect of investment assets are in addition to an account holder’s Health Savings Account administration fees. With respect to the Category 1 Funds, the account holder generally pays an administration fee directly to HealthEquity. This fee is equal to a fixed annual percentage of the value of the account holder’s investments in Category 1 Funds, which is calculated monthly in arrears based on the account holder’s average daily investment balance and is deducted automatically from the account holder’s Health Savings Account. The current fee rate is 0.40% per year (i.e. 0.033% per month, or 33 cents per month per $1,000 invested). Compensation that HealthEquity receives from fees paid directly by account holders is sometimes referred to as HealthEquity’s “direct compensation.” With respect to the Category 2 Funds, the account holder pays administration fees indirectly to HealthEquity because the administration fees are included in the expense ratios charged by the Category 2 Funds and are not charged separately. Charles Schwab Bank (“Schwab”), as sub-custodian of all account holders’ investments, receives compensation directly from the Category 2 Funds for the administrative services Schwab provides in respect of its customers’ investments in the Category 2 Funds. Amounts that HealthEquity receives as a result of this compensation sharing arrangement is sometimes referred to as HealthEquity’s “indirect compensation.” Schwab shares a portion of such compensation with HealthEquity for the administrative services HealthEquity provides in respect of our account holders’ investments in Category 2 Funds. The compensation that Schwab receives and the portion thereof that Schwab shares with HealthEquity varies from fund to fund. Following the elimination of the Category 2 Funds, HealthEquity will only receive administrative compensation from Schwab in respect of the Closed Funds.

Investments available to HSA holders are subject to risk, including the possible loss of the principal invested and are not FDIC insured or guaranteed by HealthEquity, Inc.. HealthEquity, Inc. does not provide financial advice. HealthEquity Advisors, LLC™, a wholly owned subsidiary of HealthEquity, Inc. and an SEC-registered investment adviser, does provide web-based investment advice to HSA holders that subscribe for its services (minimum thresholds and additional fees apply). HealthEquity Advisors, LLC also selects the mutual funds offered to HSA holders through the HealthEquity, Inc. platform. Registration does not imply endorsement by any state or agency and does not imply a level of skill, education, or training. HSA holders making investments should review the applicable fund’s prospectus. Investment options and thresholds may vary and are subject to change. Consult your advisor or the IRS with any questions regarding investments or on filing your tax return.