current hoosier s.t.a.r.t. choices
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DESCRIPTIONHoosier S.T.A.R.T. Indiana Deferred Compensation Plan Overview of Plan Investment Options Fall, 2010. Current Hoosier S.T.A.R.T. Choices. Currently Hoosier S.T.A.R.T. has 18 options available to participants. - PowerPoint PPT Presentation
Hoosier S.T.A.R.T. Indiana Deferred Compensation Plan Overview of Plan Investment Options Fall, 2010
Current Hoosier S.T.A.R.T. Choices1Currently Hoosier S.T.A.R.T. has 18 options available to participants.One option, the Fidelity Low-Priced Stock fund is presently closed to new contributions.
Upcoming Changes to Hoosier S.T.A.R.T.2Coming soon, the Investment Option choices will be expanded to include 9 Target-Date offerings plus a new Inflation-linked option.The increased offerings are designed to allow participants to further focus on risk-tolerance.The inclusion of an Inflation-linked option is intended to help participants protect the purchasing power of their retirement assets.
Some DefinitionsAsset Class: Broad building blocks that allow an investor to construct a portfolio best designed to reflect their risk-tolerance and objectives.Generally asset classes are categorized as:1) Cash2) BondsStocks
Asset Style: Further defines the investment universe of a particular asset class:Example: StocksLarge Cap Stocks (ex. Exxon Mobile Corp., Apple Inc., Microsoft)Mid/Small Cap Stocks (ex. Cummins Inc., Avon Products, E*Trade Fincl.)Non-US Stocks (ex. Nestle S.A., Nokia, AstraZeneca)3
What type of investor are you?Participants should consider the followingLowMediumHighLowMediumHighLowMediumHighLowMediumHighGreatModerateLittle4
Time available to select, manage and monitor your investmentsComfort Level with your ability to select and manage your portfolioInterest and knowledge of investingInvestment Strategy involvement (buy & hold vs. actively trading)Desire for a professionally-tailored solution
What type of investor are you?Hoosier S.T.A.R.T. has solutions for each investor type5
Do it for meHelp me do itDo it myselfTime available to select, manage and monitor your investmentsLowLow/MediumHighComfort Level with your ability to select and manage your portfolioLowLow/MediumHighInterest and knowledge of investingLowLow/MediumHighInvestment Strategy involvement (buy & hold vs. actively trading)LowMediumHighDesire for a professionally-tailored solutionGreatModerateLittleHoosier S.T.A.R.T. solutionReality Investing-Managed AccountTarget-Date FundsCore & Specialty Options
What is a Reality Investing-Managed Account?6A managed account is a professionally managed portfolio that is personalized and tailored to a particular investors needs and circumstances.You supply information about your goals, risk tolerance, and personal finances (both inside and outside of the Plan), etc.An investment advisor picks a diversified allocation of investment options from the Plan to fit your unique situation and retirement goals and automatically implements the portfolio for you.Your account is automatically reviewed every three months to make sure your portfolio stay aligned with your goals. Any needed adjustments occur automatically.An annual fee based on your account balance will be assessed to your account quarterly.Source: Reality Investing Overview www.hoosierstart.gwrs.com
A managed account may be an appropriate choice if:You want a professionally managed portfolio designed around your specific and unique goals and objectivesYou want a professional continuously evaluating your portfolio and adjusting it automaticallyYou want to integrate your portfolio with assets outside of the Hoosier S.T.A.R.T. plan You want to be reminded regularly to review your financial position and portfolioA managed account may not be the best choice for you if:You want to choose your own fund options or asset stylesYou do not want to pay an asset-based fee for professional adviceIs a Reality Investing-Managed Account for me?7
A target-date fund is a professionally managed option offered to participants that sets the asset allocation of the option based on the time horizon of the participant.A target-date fund is geared toward a date in the futureretirementA target-date fund is designed to be a single option solution for participants who lack the time, knowledge, or desire to construct their own portfolio allocations.A target-date fund periodically and automatically resets the asset allocation based on the time horizon.Target-date funds invest more aggressively at younger ages to maximize saving and accumulation and as a participant nears retirement the fund gradually invests more conservative to prepare for the income need.The target-date options are monitored by Hoosier S.T.A.R.T. and changes are automatically made when and if necessary.What is a Target-Date Fund?8
A Target-Date Fund may be an appropriate choice if:You want a professionally managed option designed to diversify your portfolioYou want to choose an option and forget itYou want a simple choice You want automatic and regular rebalancingA Target-Date Fund may not be the best choice for you if:Your risk-tolerance doesnt match the target-dates asset allocationYou want to choose your own fund options or asset stylesYou want a static asset allocation over timeIs a Target-Date Fund for me?9
Common mistakes when using Target-Date fundsChasing Returns or basing selection of the Target-date fund only on past performanceBecause a consistent strategy is utilized in constructing the target-date fund line up, over or underperformance of the target-date options is most likely based on the amount of equities in the fund.Investing in more than one Target-date fundThe target-date funds in the Hoosier S.T.A.R.T. Plan are designed to be professionally managed, pre-diversified options, therefore, investing in more than one target-date option does not result in more diversification.Failing to understand the Target-date funds asset allocation and failing to monitor the option selectedDespite being professionally managed and monitored, participants should make sure the Target-date funds allocation is in-line with their risk-tolerance and return objective and should review the options periodically.
Currently the Hoosier S.T.A.R.T. plan offers six target-date options for participants just beginning employment through participants in their retirement years.Coming Soon, the plan will offer nine target-date options to better help Hoosier S.T.A.R.T. participants in preparing for retirement.Also soon, as part of the roll-down process, the Indiana 2010 option will merge into the Indiana Retirement option and the Indiana 2050 option will be added to the Plan.What is offered in my Plan?11
Current Target-Date Options in HoosierS.T.A.R.T.Currently the Target-Date offerings are spread out in 10 year increments with the addition of the 2010 option closer to retirement.The Target-Date offerings represent a blend of the same Core options that are offered in the Hoosier S.T.A.R.T. plan.12
Changes coming to the Target-Date OptionsThe Indiana 2010 Fund will merge into the Indiana Retirement FundHoosier S.T.A.R.T. will soon offer Target-Date Options in 5 year increments for all ages and incorporate an Inflation-Linked fund13
For early savers, the Target-date funds begin with a more aggressive allocation to maximize savings and provide more growth.As the participant moves toward retirement, the portfolio gradually moves from more aggressive to more conservative to protect the portfolio from adverse markets and provide more income.Illustration of how Target-date funds are designedEquities can provide growth during early years while account balances are still low and future contributions are expected to be high.As retirement approaches, the investment mix automatically shifts toward stable, income generating assets.
The combination of Inflation-Linked and Stable Value are designed to provide a participant with the income that they need in retirement, while simultaneously protecting them from risinginflation.
Age 25Age 30Age 35Age 40Age 45Age 50Age 55Age 60Age 65+14
Current Building Blocks
New Building Blocks (2)
Age of Participant w/65 as Retirement DateTarget Date OptionsUnderlying Investment Options
65 or olderIndiana Retirement FundPassive Large Cap Equity: Vanguard Institutional Index
62 (61 - 64)Indiana 2010 FundSmall/Mid Cap Core: Frontegra IronBridge SMID
60 (55 - 60)Indiana 2015 FundInternational Equity: Artio International Equity II
50 (45 - 54)Indiana 2025 FundCore Plus Fixed Income: PIMCO Total Return
40 (35 - 44)Indiana 2035 FundStable Value: