Changes to Asset Allocation in Target Date Portfolios

The portfolio manager who actively oversees the NRECA 401(k) Pension Plan’s Target Date Portfolios (TDPs) periodically reviews and adjusts investment allocations to ensure each TDP’s objective continues to reflect the most recent research on life cycle investing.

Starting this fall, the manager of the TDPs—TDP 2050, TDP 2040, TDP 2030, TDP 2020 and Retirement TDP—will be increasing the share of equities and equity-like funds in each portfolio. The process should be completed by the end of October and the new allocations will be reflected in the December 31, 2014 profiles, published in late January 2015.

Participants at your cooperative who are invested in one of the portfolios with a longer timeline (TDP 2040 and TDP 2050) will see the largest shift in allocations to investments offering a larger potential for growth (and consequent greater exposure to risk). Co-op participants who are invested in TDPs with shorter timelines will notice less of a shift.

In a nutshell, here’s what to expect:

• Participants in TDP 2050 will have greater allocations of their assets in equities and equity-like funds such as real estate investment trusts (REITs) and commodities, moving from a 90% allocation to a 99% allocation. Those invested in TDP 2040 will have 95% of their allocations in equities and equity-like funds (previously 80%).
• Participants in TDP 2030 will have 77% of their allocations in equities and equity-like funds (previously 67%). Those invested in TDP 2020 will have 55% of their allocations in equities and equity-like funds (previously 51%).
• Participants in the Retirement TDP will see their holdings in equities and equity-like funds bump up by 2%, from 38% to 40%—a conservative allocation designed to maintain relatively less volatility in retirement.

For more information, contact the Personal Investment & Retirement Consulting (PIRC) team by phone at 866.673.2299 (option 5, then 2) or by email at pirc@nreca.coop.