Coming off an exceptionally positive 2021 for equity returns, market volatility in 2022 has been driven mostly by inflation concerns, interest rates, and the war in Ukraine. Despite these economic headwinds, the markets have recovered more than half of their losses YTD and some asset classes, like U.S. Large Value stocks, are back in positive territory.
We do not know how the markets will finish this year, but the odds are still great that equities will finish with positive returns. More importantly, if you are in equity funds inside your 457(b) account, your contributions in January and February bought stocks at discounted prices.
Please remember that stock market corrections of -10% or greater historically occur about every 12 to 24 months. Corrections are normal and they should be an expected part of investing and growing your wealth in the markets. Bear markets, which represent a decline of -20% or greater, occur an average of every 3.6 years. They are also a normal part of long-term investing. The most important thing that you can do during market cycles is to stay fully invested. This is ultimately the key to accumulating retirement assets and long-term wealth.
DecisionPoint Model Portfolio Fund Change
As the fiduciary advisor on you 457(b) account, DecisionPoint is responsible for the selection and monitoring of all of the investments available to you on our investment platform.
Each quarter we rigorously benchmark and evaluate these investments against all publicly traded mutual funds to determine if they are performing well against their peer group when measured in terms of cost and investment return. From time to time we will replace funds that we feel are not meeting our standards, or when we think market conditions warrant a change.
We are in the process of making a fund change in our 457(b) Model portfolios which may only affect you if you have invested in the Growth, Moderate, Conservative, Defensive, or Fixed Income portfolios:
You do not need to do anything. This change will also not affect the overall Expense Ratio of our model portfolios which will remain between 0.13% and 0.16% depending on the model you are in.
Rebalancing the DecisionPoint Model Portfolios
At the same time we are making this fund change in our portfolios, we will also take the opportunity to “rebalance” the portfolios. Rebalancing is selling what has done well lately and buying what has not been doing so well lately. Consistent rebalancing has been shown to increase long term returns.
When we rebalance the portfolios, you will see activity in your online account at Spectrum (www.spectrumpension.com) which will show as “Transfers”. Please be aware that these “transfers” reflect money being moved between funds in your account. There is no money leaving your account and there are no fees or trading costs associated with the rebalancing. This is happening in an effort to boost your investment returns over the long term.
As always, please reach out if we can be of assistance!
- Your DecisionPoint Financial Planning Team -