Mutual Funds 101: One-decision investing, two options

investment spotlight mutual funds

1. What is a Model Portfolio?

A Model Portfolio is a predefined portfolio based on your risk tolerance.

Why would I choose to invest in a model portfolio?

Model Portfolios can help you achieve your personal investment goals by placing you in one of five predefined portfolios based on the results of your Risk Profile Assessment. Model Portfolios give you the ability to hold a personalized portfolio that matches your risk tolerance rather than your age. You don’t need to spend a ton of time selecting and managing individual investments.

What investments make up the model portfolios?

The investments that make up the Model Portfolios are selected from prescreened mutual funds offered by Member Benefits.

2. What are Target Retirement Funds?

A target retirement fund is a mutual fund designed with a specific retirement year in mind. Investors can pick a target retirement fund based on the year they plan to begin taking distributions and let a professional manager do the rest.

For example, if you are currently age 36 and would like to retire at age 65, you can invest in a 2045 Target Retirement Fund. As the fund approaches the target retirement year, the fund allocation becomes more conservative, meaning investment allocations switch to more fixed-income investments to decrease risk and preserve capital.

Target retirement funds invest in a mix of stock and bond funds that steadily become more conservative as they approach their target date. The principal value of a target retirement fund is not guaranteed and may gain or lose value now and after its target date.

 

Learn more at our investments page.

 

Investment models are not FDIC-insured, and they are not bank-guaranteed. Investment models may lose value. Past performance is no guarantee of future results. Model performance returns illustrate the relationship between risk and reward. The WEA Member Benefits model portfolios are risk-based. The more conservative the underlying asset weightings are, the lower the expected rate of return. Because of market changes, the makeup of your actual account portfolio will not exactly match the model portfolio. We may perform periodic adjustments of the model portfolio investments and rebalancing of your account to more closely match the model portfolio you select. Model portfolios are developed by WEA Financial Advisors, Inc., (WEA FA) under the oversight of the WEA Member Benefits Investment Committee.

Model portfolios may be adjusted at the discretion of WEA FA and the Investment Committee with prior notice to you. From time-to-time there may be extraordinary situations that will warrant more scrutiny when making adjustments. An example is the market downturn in October 2008. Although WEA FA carefully evaluates the makeup of the portfolios on a regular basis, we make no representation regarding the likelihood or probability that any or all of the portfolios will in fact achieve a particular investment goal or fulfill the risk tolerance profile as described for each portfolio. As a self-directed investor, you should carefully consider the merit and appropriateness of the available investments under your district’s retirement plan in light of your own personal financial circumstances, including your other assets, income, investments, and/or cash flow needs.

Re-Assess Your Investment Needs Regularly: Because your needs, goals, portfolio, and situation may change over time, be sure to re-evaluate your investment strategy at least once a year. You can always choose a different model or create your own mix. Redemption fees may apply. When participating in a WEA Member Benefits model portfolio, you must complete the Risk Profile Questionnaire every three years. You may not continue to use the model portfolio option if you do not timely complete a Risk Profile Questionnaire. In such an event, and if we receive no other instruction from you, your plan assets will be moved to your plan’s QDIA (qualified default investment alternative).

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