Tiered Investment Choices
*View a full version of the Guide to Selecting Your Investment Options brochure here.
In an effort to make it easier to navigate through the investment options currently offered through Duke's Faculty and Staff Retirement Plan, Duke offers a tiered approach to investing.
While diversity and choice are good features to have in a retirement plan the multitude of options can be intimidating to many. By categorizing the investment options into three investment tiers, it helps to serve all employees: those who seek simplicity using a hands-off approach and those who seek to create their own investment portfolio by using a more hands-on approach.
Each of Duke’s retirement plan vendors offer investment options in the same tiered structure, providing you with the opportunity to build a diversified investment portfolio without having to spread your investments over multiple providers.
Below is a basic description of the three tiers:
Tier 1: Asset Allocation Funds - A Simplified Approach
This tier includes two types of funds that offer a way to make a single choice for your retirement needs: Target Date Funds and a Balanced Fund.
The Target Date Funds have an asset allocation mix among stocks, bonds, and short-term instruments that is more aggressive when you're younger and more conservative as you near retirement. They are constructed from investments in different asset classes and will automatically adjust investment strategy according to the objectives described in the fund prospectus. All you need to do is select the fund that is closest to the year you plan on retiring or the year you’ll reach Social Security retirement age. For more information about Target Date Funds, click here.
The Balanced Fund combines stock components, bond components and sometimes a money market component, in a single portfolio. Balanced funds generally stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation and do not generally change their asset mix. The Balanced Fund is another way of choosing one option that already has a diversified mix of funds. However, the investment mix does not automatically change as you get older, like a Target Fund.
Tier 2: Core Funds - A "Best in Class" Approach
These funds represent the primary asset classes (stocks, bonds, and short-term instruments) and have been chosen by the IAC based on their suitability for inclusion in a customized retirement portfolio. You can select from this group of "best-in-class" funds to build your own diversified portfolio. Your preferred investment carrier will have resources available to help you.
Tier 3: Other Funds
These funds will not be monitored by the IAC, so you will be responsible for monitoring the holdings and performance of these funds to ensure they remain in line with your investment strategy.