PLANSPONSOR - October/November 2018 - 58

RUNNING THE FUND
Looking Beyond Performance
A single path can be risky when selecting funds
I
t is probably the most ubiquitous disclosure
one comes across in the investing
world: " Past performance is no
guarantee of future results. "
This simple statement figures prominently
in every mutual fund prospectus,
yet experts agree the lesson is remarkably
hard to instill in investors-including
participants in defined contribution (DC)
retirement plans. What is more, once the
lesson is learned, it is easily ignored during
long bull markets.
According to Brad McMillan, who
is chief investment officer (CIO) for
Commonwealth Financial Network in
Boston, the recently passed 10-year anniversary
of the lowest point in the Great
Recession makes a timely teaching opportunity.
Reflecting on the aftermath of
the September 2008 Lehman Brothers
collapse, he says, is valuable for bringing
perspective to how one makes fund choices
and considers performance, today.
Risk Matters
" The real lesson of the financial crisis was
that the system was more vulnerable than
anyone thought, " McMillan says.
Prior to the crisis, many investors
might not have realized the risks they were
taking when they moved into funds that
had posted strong performance records for
the preceding three- or five-year period.
This included many DC plan participants
and target-date fund (TDF) owners.
Data shared by Angela Antonelli, executive
director of the Georgetown University
Center for Retirement Initiatives (CRI),
paints the picture clearly. She considers the
example of a worker ready to retire in early
2008 with $500,000 saved in an assetallocation
fund with 50% equities and
58 PLANSPONSOR.com October-November 2018 Art by Suharu Ogawa
50% bonds. Between January 2008 and
March 2009, global equities lost 41.1% of
their value, while U.S. bonds gained 4.3%.
In that environment, Antonelli says, this
worker, who was nearing retirement and
thought he was invested for the long term,
would have lost over 18% of his net balance.
While far from predicting an imminent
sequel to the Great Recession,
McMillan warns there are echoes of
previous pre-crisis periods reverberating
in the global marketplace today. After so
much growth, there is more of a focus on
pursuing performance than on the prospect
of preparing for the next downturn.
David Lafferty, chief market strategist
for Natixis Investment Managers in
Boston, says the issue is intensified by the
fact that 10 years of extremely low interest
rates have pushed even cautiously minded
investors further down the credit quality

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PLANSPONSOR - October/November 2018

Table of Contents for the Digital Edition of PLANSPONSOR - October/November 2018

Looking Closer
2018 DC Survey: Plan Benchmarking
Operational Loan Failures
Looking Beyond Performance
Staying Ahead of Inflation
Private Market Investing
Income Disruptions
Easy Access
PLANSPONSOR - October/November 2018 - Easy Access
PLANSPONSOR - October/November 2018 - FC1
PLANSPONSOR - October/November 2018 - FC2
PLANSPONSOR - October/November 2018 - C2
PLANSPONSOR - October/November 2018 - 1
PLANSPONSOR - October/November 2018 - 2
PLANSPONSOR - October/November 2018 - 3
PLANSPONSOR - October/November 2018 - 4
PLANSPONSOR - October/November 2018 - 5
PLANSPONSOR - October/November 2018 - 6
PLANSPONSOR - October/November 2018 - 7
PLANSPONSOR - October/November 2018 - 8
PLANSPONSOR - October/November 2018 - 9
PLANSPONSOR - October/November 2018 - 10
PLANSPONSOR - October/November 2018 - 11
PLANSPONSOR - October/November 2018 - 12
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PLANSPONSOR - October/November 2018 - 18
PLANSPONSOR - October/November 2018 - 19
PLANSPONSOR - October/November 2018 - 20
PLANSPONSOR - October/November 2018 - 21
PLANSPONSOR - October/November 2018 - 22
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PLANSPONSOR - October/November 2018 - 28
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PLANSPONSOR - October/November 2018 - 30
PLANSPONSOR - October/November 2018 - 31
PLANSPONSOR - October/November 2018 - 32
PLANSPONSOR - October/November 2018 - 33
PLANSPONSOR - October/November 2018 - Looking Closer
PLANSPONSOR - October/November 2018 - 35
PLANSPONSOR - October/November 2018 - 36
PLANSPONSOR - October/November 2018 - 37
PLANSPONSOR - October/November 2018 - 38
PLANSPONSOR - October/November 2018 - 39
PLANSPONSOR - October/November 2018 - 2018 DC Survey: Plan Benchmarking
PLANSPONSOR - October/November 2018 - 41
PLANSPONSOR - October/November 2018 - 42
PLANSPONSOR - October/November 2018 - 43
PLANSPONSOR - October/November 2018 - 44
PLANSPONSOR - October/November 2018 - 45
PLANSPONSOR - October/November 2018 - 46
PLANSPONSOR - October/November 2018 - 47
PLANSPONSOR - October/November 2018 - 48
PLANSPONSOR - October/November 2018 - 49
PLANSPONSOR - October/November 2018 - 50
PLANSPONSOR - October/November 2018 - 51
PLANSPONSOR - October/November 2018 - 52
PLANSPONSOR - October/November 2018 - 53
PLANSPONSOR - October/November 2018 - Operational Loan Failures
PLANSPONSOR - October/November 2018 - 55
PLANSPONSOR - October/November 2018 - 56
PLANSPONSOR - October/November 2018 - 57
PLANSPONSOR - October/November 2018 - Looking Beyond Performance
PLANSPONSOR - October/November 2018 - 59
PLANSPONSOR - October/November 2018 - 60
PLANSPONSOR - October/November 2018 - 61
PLANSPONSOR - October/November 2018 - Staying Ahead of Inflation
PLANSPONSOR - October/November 2018 - 63
PLANSPONSOR - October/November 2018 - Private Market Investing
PLANSPONSOR - October/November 2018 - 65
PLANSPONSOR - October/November 2018 - Income Disruptions
PLANSPONSOR - October/November 2018 - 67
PLANSPONSOR - October/November 2018 - 68
PLANSPONSOR - October/November 2018 - 69
PLANSPONSOR - October/November 2018 - 70
PLANSPONSOR - October/November 2018 - 71
PLANSPONSOR - October/November 2018 - 72
PLANSPONSOR - October/November 2018 - C3
PLANSPONSOR - October/November 2018 - C4
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