Optional Asset Allocation program for participants

Transcription

1 Richard Gagne Retirement Security Education What is GoalMaker? Optional Asset Allocation program for participants Uses professional asset allocation modeling based on portfolios created by Morningstar Associates or Registered Investment Advisor GoalMaker takes age and risk tolerance into consideration; Target date funds are age based 2 1

2 Why GoalMaker? Why is Asset Allocation important for me? Education modules How Asset Allocation works? Determines investor style What should I invest in? Provides a model portfolio Will my investments remain as-is? Features automatic rebalancing and age adjusting portfolios 3 Picture asset allocation at work Think about investing in a variety of investments. Minimize reliance on any ONE. VERSUS 4 2

3 Understand your plan s investment options Stable value funds pay a rate of return, promised by financial institutions, for a stated period of time. Stable Value Funds 5 Understand your plan s investment options Fixed income funds invest in bonds (loans to companies or government agencies) and preferred stock. Stable value funds pay a rate of return, promised by financial institutions, for a stated period of time. Stable Value Funds Fixed Stock Funds 6 3

4 Understand your plan s investment options Fixed income funds invest in bonds (loans to companies or government agencies) and preferred stock. Stable value funds pay a rate of return, promised by financial institutions, for a stated period of time. Stock funds invest in shares (ownership) of companies and participate in the profits and losses. Stable Value Funds Stock Funds Fixed Income Funds 7 Risk vs. Reward Understand an investment s risk vs. reward This is a simplified illustration of the relationship between investment risk and potential rate of return. There is no assurance that higher risk investments will provide greater returns over time. Past performance is not indicative of future performance. 8 4

5 Performance is unpredictable Investments react to market and economic conditions differently Variety helps even out the potential rough spots Returns High Stable Value 5-Year Treasury Note Yield Index Fixed Income Barclays Capital Aggregate Bond Index Large Cap Russell Top 200 Index Stocks Mid Cap Russell Mid Cap Index Small Cap Russell 2000 Index Low International Morgan Stanley Capital International EAFE Index For complete benchmark definitions please see the back of the presentation. This example is for illustrative purposes only and is not intended to represent the performance of any single investment or combination of investments. Past performance of investments or asset classes does not guarantee future results. Indexes are unmanaged it is impossible to invest directly in an index. It is possible to lose money by investing in securities. 9 You ll need to build yours 100% 10 5

6 Asset allocation is all about YOU It is a highly individualized process, based on a person s investor style, years to retirement and financial goals. 11 Choosing your investments: Step 1 Determine your: Years until retirement Investor style (Please try our Investor Style Quiz) Conservative Moderate Aggressive 12 6

7 Investor Style Quiz Are you very, somewhat or not concerned about the following: 1. The possibility you won t earn enough over the long term. 2. A loss of buying power or quality of life. 3. Wide swings in the value of your account over 1-3 months 4. Wide swings in the value of your account over 1-2 years 13 Investor Style Quiz How would you describe your experience and comfort level with the following? 1. Stocks or stock funds 2. Bonds or bond funds What if questions regarding performance. 14 7

8 Automatic asset allocation and rebalancing Each model portfolio: Contains a mixture of stock, fixed income and stable value investments available within your plan Targets your specific investor style and number of years to retirement Rebalances periodically to align with your target portfolio* Target portfolio Rebalancing for a Moderate Investor Stable Value Fixed Income Value Growth Mid Cap Small Cap International *Developed by Morningstar Associates, LLC, a respected industry leader 15 Automatic asset allocation and rebalancing How rebalancing helps keep your portfolio on target Target portfolio Rebalancing for a Moderate Investor Changes due to market fluctuations Stable Value Fixed Income Value Growth Mid Cap Small Cap International *Developed by Morningstar Associates, LLC, a respected industry leader 16 8

9 Automatic asset allocation and rebalancing How rebalancing helps keep your portfolio on target Target portfolio Rebalancing for a Moderate Investor Rebalanced portfolio Stable Value Fixed Income Value Growth Mid Cap Small Cap International *Developed by Morningstar Associates, LLC, a respected industry leader 17 Moderate asset allocation in action Age 35 Age 50 Age 55 Age 60 15% 34% 40% 25% 60% 26% Stable Value Fixed Income Stocks 18 9

10 Thanks for coming! Following 2 pink disclosures: only needed if registered products are used (mutual funds) Investors should consider the fund s investment objectives, risks, charges and expenses before investing. The prospectus, and if available the summary prospectus, contain complete information about the investment options available through your plan. Please call for a free prospectus and if available, a summary prospectus that contain this and other information about our mutual funds. You should read the prospectus and the summary prospectus, if available carefully before investing. It is possible to lose money when investing in securities. Shares of the registered mutual funds are offered by Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 4th Floor, Newark, NJ PIMS is a Prudential Financial company. Prudential Retirement is a Prudential Financial business. Retirement Counselors are registered representatives of PIMS. Retirement Counselors are registered representatives of Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ PIMS is a Prudential Financial company. An investment in the money market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Barclays Capital U.S. Aggregate Bond Index: This index covers the U.S. investment grade fixed rate bond market (measuring bonds with maturities of at least one year), with index components for government and corporate securities, mortgage pass-through securities, and asset backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. 5-Year Treasury Average Yield: The average daily treasury yield for U.S. Treasury Notes with a maturity of five years (negotiable debt obligations of the U.S. Government, considered intermediate in maturity). Russell Top 200 Index: A market capitalization weighted index of the largest 200 companies in the Russell The Russell Top 200 Index is a benchmark index for U.S.-based large-cap stocks: the average member has a market cap above $100 billion. The index is reconstituted annually to account for new members and growing companies. Russell Midcap Index: A market capitalization-weighted index that measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 30% of the total market capitalization of the Russell 1000 Index. 19 Thanks for coming! Note to Retirement Counselor: Be sure to select the appropriate magenta disclosures in order shown and change to black and delete all that do not apply. Russell 2000 Index: A market capitalization-weighted index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. MSCI EAFE Index (net): A market capitalization-weighted index comprised of companies representative of the market structure of 21 developed market countries in Europe, Australia and the Far East. The MSCI EAFE Index is available both in local currency and U.S. dollar terms. The returns shown in the performance chart are calculated with dividends reinvested and are net of foreign withholding tax. This is a partial list of stable value disclosures. If plan uses different disclosure, it needs be added and presentation will require compliance review GIF if applicable The Guaranteed Income Fund is a group annuity product issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT and is backed by the full faith and creditworthiness of the issuer. Deposits made to the product are deposited in the issuer s general account. Principal and interest are fully guaranteed by the issuer. Expenses related to the GIF are calculated by Prudential Retirement Insurance and Annuity Company and incorporated in the GIF crediting rate. Past rates are not indicative of future interest rates. Pru Stable Value disclosure if applicable The Stable Value Fund is a bank collective fund trusted by Wells Fargo Bank and sub advised by Galliard Capital Management, Inc., a wholly owned subsidiary of Wells Fargo Bank, N.A. The Stable Value Fund will invest 100% in the Wells Fargo Stable Return Fund having the same investment objective. The assets of the Stable Value Fund and the Wells Fargo Stable Return Fund are not deposits or obligations of, or guaranteed by the Wells Fargo Bank; are not FDIC insured; and are not backed or guaranteed by the U.S. government. GIA if applicable The Guaranteed Interest Account is a group annuity product issued by The Prudential Insurance Company of America, Newark, NJ and is backed by the full faith and creditworthiness of the issuer. Deposits made to the product are deposited in the issuer s general account. Principal and interest are fully guaranteed by the issuer. Past interest rates are not indicative of future interest rates. Morningstar Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Associates provides consulting services to Prudential with respect to the GoalMaker model portfolios and in no way acts as an investment advisor to investors of Prudential s products or services. The GoalMaker model portfolio allocations were developed by Morningstar Associates within a set of guidelines determined by Prudential. The extent to which Morningstar Associates recommendations are implemented within the models is at the sole discretion of Prudential. Morningstar Associates is not affiliated with Prudential. The Morningstar name and logo are registered marks of Morningstar, Inc. Please DELETE this box if you use this slide