International UAW

Introduction

With over two dozen investment options available, the International UAW (Int’l UAW) plan is among the best in the country. With this large number of funds, there is ample opportunity to build a well-diversified portfolio for your International UAW 401(k) savings.

For your reference, we have provided a fund table displaying style, risk, and past performance for many of the funds in the Int’l UAW plan. In addition, please visit our “Fund Commentary” section for further information on specific funds and/or fund types within the Int’l UAW account.

To the right you will find articles of interest as well as news relating to International UAW employee and retiree benefits. Check this page for future updates to the Int’l UAW plan, as well as news that affects International UAW employees and retirees.

Fund Commentary

Fidelity's Freedom Funds

The Fidelity Freedom Funds are designed for those participants who wish to base their asset allocation decision on a specific target year. The account is typically aligned with the Freedom Fund that most closely matches the year in which you anticipate beginning to withdraw your savings for your retirement.

Six of these funds are included in the Int'l UAW plan, with 10-year incremental targets from 2000 to 2050, along with a fund targeted as Income Fund. The way the Freedom Funds are designed, the further away the target date, the more aggressive the asset allocation, conversely, the closer the date, the greater the emphasis on preservation of capital in the asset allocation.

Freedom Funds hold some appeal in that they are simple to explain and administer. While this approach is unique, we believe the asset allocation decisions provided by these funds are crude at best. Freedom Funds attempt to make decisions about asset allocation based solely on a target date. An investor’s tolerance for risk and financial goals are other key factors that should largely play a role in determining the investment strategy and asset allocation. Additionally, they leave no room for the fund manager to tactically adjust the allocation strategy based on specific opportunities within the financial markets or in response to prevailing market conditions.

The returns realized in these commingled vehicles are diluted by a rigid adherence to mechanical allocation parameters. These parameters may prove to be shortsighted and inappropriate for everyone participating in the pool. The real world changes every day, yet proponents of Freedom Funds, or similar funds, expect someone to stick to a single game plan for as much as 40 years, whether interest rates are rising or falling, or whether the economy is in expansion or recession. While Freedom Funds offer a simple one-stop-solution, we continue to advise participants to avoid these funds and retain the flexibility to proactively adjust their portfolios as needed.

A Note on Institutional Funds

Many retirement savings plans, including the Int’l UAW, have moved to using institutional funds in place of retail mutual funds. In doing so the plan architects are moving to investment options with lower internal operating expenses. The institutional funds do not have the marketing costs associated with retail mutual funds that are ultimately passed along to the shareholders in the form of fund management expenses. The problem with institutional funds, however, is the lack of publicly available information about the funds that is so readily available for retail mutual funds through the fund family’s website or other data retrieval services. This is one of the drawbacks to institutional funds as investment options in the Int’l UAW plan. Because of the lack of publicly available information, the institutional funds within the plan are not detailed in our Fund Tables.

Please reference "Target-Date Funds Face Regulation", published in The Wall Street Journal.

Fund Table - December 31, 2012

The International UAW fund table provides critical data on investment options within the plan.

  International UAW - Fund Table                                                                      

If you have any questions concerning our website or your Int'l UAW 401(k) account, please feel free
to contact us using the following e-mail link: Mainstay@mainstaycapital.com
or call us toll-free at 1-866-444-6246.

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