UC is updating the fund menu for the UC Retirement Savings Program—the 403(b), 457(b) and DC Plans. The scheduled changes are designed to make it easier for you to build a diversified, lower-cost investment mix based on your time horizon and risk tolerance. Beginning July 17, 2017, all participants in the Retirement Savings Program will receive communications (mail or email) to ensure you understand the changes and your investment options.
Fund changes can be viewed in your account on October 3, 2017. If you’d like to make adjustments before these changes take effect, you’ll need to request investment changes before 1:00 p.m. PT on Monday, October 2, 2017.
What’s changing on October 2, and why
Three funds are being renamed
Three funds will have a new name but will keep the same investment manager, strategy, and holdings. Investment management fees (the “expense ratio”) will not change. The new names make it easier to understand how each fund invests and are consistent with the names of our other UC funds.
- The Vanguard REIT Index Fund’s name will change to the UC Real Estate Fund.
- The Vanguard Social Index Fund’s name will change to the UC Social Equity Fund.
- The Vanguard Small Cap Fund’s name will change to the UC Domestic Small Cap Equity Fund.
Three funds are being restructured
Three funds will have a new name and investment structure, but will keep the same investment manager and strategy. UC is switching these three funds from publicly available mutual funds to funds managed specifically for UC’s 403(b), 457(b) and DC Plans. All three funds will have lower investment management fees because they will have lower marketing and overhead-related costs than similar, publicly traded mutual funds.
Note that the Fidelity funds that currently provide a revenue credit to help offset plan expenses will no longer provide that credit due to the restructuring.
- The DFA Emerging Markets Fund will change to the UC Emerging Markets Equity Fund.
- The Fidelity Growth Company Fund will change to the UC Growth Company Fund.
- The Fidelity Diversified International Fund will change to the UC Diversified International Fund.
Two funds are being removed
The UC Balanced Growth Fund and the UC Global Equity Fund will be removed from the menu. These two funds are similar to other funds on the menu, so removing them eliminates duplication.
Balances in and future contributions to these funds will transfer as follows, unless you select different funds.
- Investments in the UC Balanced Growth Fund will transfer 100% to the UC Pathway Fund closest to the year you turn age 65. Both funds invest in multiple underlying funds, but UC Pathway Funds adjust their asset mix to grow more conservative over time.
- Investments in the UC Global Equity Fund will transfer 85% to the UC Domestic Equity Index Fund and 15% to the UC International Equity Index Fund. The UC Global Equity Fund is mainly a combination of two underlying funds. The fund invests roughly 80–85% of its assets in the UC Domestic Equity Index Fund and 15–20% in the UC International Equity Index Fund. Many Plan participants invested in the UC Global Equity Fund may not be aware that they hold a large position in U.S. stocks, and as a result, may not have a clear picture of their overall risk.
You may want to take action
If you prefer, you can have your account transfer funds differently than described here. Just request any investment changes before the fund changes are effective, at 1:00 p.m. PT on October 2, 2017. This may also be a good time to take a fresh look at all of your investment options and the funds available on the updated menu.
To learn more about all of the funds available to you, review your investments and make any needed changes, go to netbenefits.com or call Fidelity at 866-682-7787. For even more support, call 800-558-9182 to schedule a consultation with a Retirement Planner.
Note that our previous post on this subject suggested there would be a difference in the regulatory regime regarding the new plans. It would be good to have a clarification on that aspect.
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*See our earlier posting: https://uclafacultyassociation.blogspot.com/2017/08/could-be-clearer.html
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