403(b) Investment Lineup Improvements Presented by: Hamlines 403(b) - PowerPoint PPT Presentation

403(b) Investment Lineup Improvements Presented by: Hamline’s 403(b) Retirement Committee April 2016

Agenda ➢ Introduction ➢ Investments 101 ➢ New Investment Options ➢ Next Steps 2

Purpose of the committee ➢ Formed in 2009 -- ERISA regulations ➢ Responsible for 403(b) oversight and administration ➢ Monitor performance fund offered under the plan ➢ When appropriate select new fund managers/investment options for the plan governed by: ○ Offering a menu of investment options in various asset classes in order to provide for an efficient level of diversification and to encompass the risk/return spectrum ○ Maximizing returns while maintaining reasonable and prudent levels of risk 3

Who is on the committee? Finance Margaret Tungseth Michelle Hegarty Faculty Dan Lehmann (HSB) Dan Toninato (HSB) David Larson (HUSL) HR Julie Kline Tina Cubas 4

Why changes are being made? Response to the 403(b) Investment Policy: “The Committee is responsible for the selection and monitoring of investment options available under the Plan.” “The Committee has authority to select investment options to be offered to participants and monitor those investments on at least a semi-annual basis.” “The Committee is obligated to make decisions in the best interest of the Plan and its participants.” 5

Investments 101 6

Investing 101 – Asset Allocation Distributing your 403(b) investments across several asset class 7

Examples of Asset Classes U.S. Equity (stocks) Bonds / Fixed Income 1.Large capitalization (cap) mutual funds / 1.Government bond funds indexes (big companies) 2.Short-term bond funds 2.Mid-size cap funds / indexes 3.Longer-term bond funds 3.Small cap 4.Inflation protected government bonds 4.Growth funds (TIPS) 5.Value funds Alternative asset classes Non - U.S. Equity 1.Real Estate 1.International / global equities 2.Others 2.Developed markets Automatic Allocation done by 3.Emerging markets Retirement Date Funds 1.Uses multiple asset classes The 403b Retirement Committee’s 2.Shifts to less risky assets over time goal is to provide you with the best collection of funds & indexes to 3.TIAA-CREF Lifecycle 20xx successfully asset allocate. 8

Current Retirement Plan Balances $128.1 million 2015 *Withdrawal of TIAA Traditional =10 years, equal installments, however 3% guaranteed growth 9

Current Retirement Plan Contributions $1.5 million 2015 *Withdrawal of TIAA Traditional = 10 years, equal installments, however 3% guaranteed growth 10

Criteria for 403(b) Funds 1. Manager tenure and experience 2. Excess Performance (better than benchmark, 3, 5, 10 years) 3. Peer return rank (top 50% of peer group, 3, 5 years) 4. Expense ratio (top 50% of peer group) 5. Risk rank (3, 5 year) 6. Sharpe Ratio (3, 5 year) (return for volatility) 7. Up capture and down capture (5 year) 11

Fund Option Improvements for 2016 Actively 1. Janus Triton T (JATTX) -- small growth fund managed 2. JPMorgan Disciplined Equity Select (JDESX) -- large blend 3. PMorgan Intrepid Value Select (JPIVX) -- large value 4. JPMorgan Mid Cap Growth Select (HLGEX) -- mid cap growth 5. Lazard Int’l Strategic Eq Inst (LISIX) -- foreign large blend 6. Parnassus Core Equity (PRILX) -- large blend 7. Principal Diversified Real Asset Fund Inst (PDRDX) -- real asset 8. Victory Integrity Small-Cap Value Y (VSVIX) -- small value 9. TIAA-CREF Lifecycle 2060 (TLXPX) -- target-date Indexes 10. Vanguard 500 Index Adm (VDIAX) -- large-cap index 11. Vanguard Federal Money Market Inv (VMFXX) -- low cost money market 12. Vanguard REIT Index Adm (VGSLX) -- REIT index 13. Vanguard Small Cap Index Adm (VSMAX) -- small cap index 12

Funds being Phased Out in 2016 Funds 1.TIAA-CREF Int’l Equity (TREPX) -- relative performance 2.TIAA-CREF Large-Cap Value (TRCPX) -- relative performance 3.TIAA-CREF Mid-Cap Growth (TRGPX) -- relative performance 4.TIAA-CREF Small-Cap Equity (TSRPX) -- relative performance 5.Vanguard Prime Money Mkt Inv (VMMXX) -- money market reform 6.CREF Equity Index R2 (vari annuity) (QCEQPX) -- relative performance 7.CREF Inflation-Linked Bond R2 (QCILPX) -- relative performance 13

Next Steps • First: Determine what funds you are currently investing in. To verify your current investment selections log in to the TIAA website at https://www.tiaa.org – Click on “Log In” • Enter your personal TIAA CREF User ID and Password • If you do not have your TIAA CREF credentials, click “Log in Help” – Forgot User ID or Forgot Password, or • Call TIAA CREF to reset your credentials, 800-842-2252 • Second: Determine if you want to make changes – Consult your personal financial advisor, or TIAA CREF financial advisors for advice 14

Next Steps (cont.) Mutual Funds Annuity Funds TIAA-CREF International Equity Fund → Lazard Int’l Strategic CREF Equity Index Account - R2 → Vanguard 500 Index Equity Admiral TIAA-CREF Large-Cap Value Fund → JP Morgan Intrepid CREF Inflation - Linked Bond Account - R2 → Principal Value Diversified Real Asset Fund Inst TIAA-CREF Mid-Cap Growth Fund → JP Morgan Mid Cap CREF Stock Account - R2 → JP Morgan Disciplined Growth Selec Equity ( Action required to make this change ) TIAA-CREF Small Cap Equity → Vanguard Small-Cap Index Vanguard Prime Money Market Inv → Vanguard Federal Money Market Inv No Action Required: Your current assets as well as your May Need to Take Action: Your future contributions will future contributions will be moved to the new investment be moved to the new investment options. However, if options. you would like your current assets to also be moved, you will need to take action. TIAA CREF Lifecycle Funds - If currently contributing to the lifecycle funds, no action is needed. 15

Next Steps (cont.) • Final: If you determine that you would like to move funds, several methods are available: – Online: Log in to your secure account at www.tiaa.org • Change the direction of future contributions • Transfer existing assets – Phone: Call TIAA-CREF at 800-842-2252 Monday-Friday, 7a.m. to 9 p.m. or Saturday, 8 a.m. to 5 p.m. (CT) – In Person: Schedule an individual consultation at www.tiaa-cref. org/schedulenow • TIAA-CREF will be on campus Tuesday, Wednesday, Thursday and Friday of this week conducting individual consultations. • Schedule your appointment ASAP! 16

Overview of Hamline 403(b) Investments Asset Class Previous Fund Option Change Current Investment Option Fixed Account TIAA Traditional - TIAA Traditional Money Market CREF Money Market & Vanguard Money Removal/Replacement CREF Money Market & Vanguard Prime Market Inv Federal Money Market Inv Inflation Protection CREF Inflation Linked Bond - R2 Removal/Replacement Principal Diversified Real Asset Intermediate-Term Bond CREF Bond Market - CREF Bond Market Moderate Allocation CREF Social Choice - CREF Social Choice Large Value TIAA CREF Large Cap Value Removal/Replacement JP Morgan Intrepid Value Large Cap Index CREF Equity Index - R2 Removal/Replacement Vanguard 500 Index Large Blend CREF Stock - R2 Addition CREF Stock - R2 & JP Morgan Disciplined Equity Large Blend (SRI) - New Parnassus Core Equity Large Growth CREF Growth - CREF Growth Mid-Cap Value TIAA CREF Mid Cap Growth - TIAA CREF Mid Cap Growth Mid-Cap Growth TIAA CREF Mid-Cap Growth Removal/Replacement JP Morgan Mid Cap Growth Select Small-Cap Value - New Victory Integrity Small-Cap Value Small-Cap Blend TIAA CREF Small-Cap Equity Removal/Replacement Vanguard Small-Cap Index Small-Cap Growth - New Janus Triton World Stock CREF Global Equities - R2 - CREF Global Equities Foreign Large Blend TIAA CREF International Equity Removal/Replacement Lazard Int’l Strategic Equity Real Estate TIAA Real Estate - TIAA Real Estate REIT - New Vanguard REIT Index Target-Date TIAA CREF Lifecycle - TIAA CREF Lifecycle 17

Questions?