UC INVESTMENTS - Board Of Regents

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UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SRetirement SavingsDecember 31, 2020U C IINVESTMENTSNVESTMENTSUC

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SUC Investments Way1

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SSeptember 30, 2019 126.6 BUC Retirement Savings2nd largest public DC plan in the US with 31.5 Billion in AssetsR E T IRE M EN T S A V IN G S O V E RV IE W Established in 1967 Over 325,000 participants 3 Plans: 403(b), 457(b), DC Plan Largest 403(b) plan in the US Target Date Fund (Pathway) default since 2014 12.3 billion in Target Date Funds 31.5 BILLION ACROSS 3 PLANS 31.5BTax Deferred 403(b) Plan: 22.0B71%457(b) Deferred Compensation Plan: 4.0B11%Defined Contribution Plan: 5.5B17%2

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SUC Retirement Savings 31.5 Billion in Assets as of December 31, 20206 YEAR EVOLUTION2020R E T I R EM EN T S A V I NG S A S S E T S 1 9 6 7 – 2020Move 4 fixed income funds to passive2019Launch of Pathway 20652018 Million3rd Party manager for Pathway2017White labeled FundsMoved to Institutional Vehicles2015Reduced funds from 64 to 1620142020As of 12/31/2020Pathway becomes Default3

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SRetirement Savings over 6 Years2014 - 2020 Recruited strong team at UC Investments to manage Retirement Savings Program In 2013 -- 242 funds (just before CIO Jagdeep Singh Bachher’s arrival) In 2020 -- 13 funds (less is more) Target Date Funds become default choice replacing the Savings Fund in 2014 In 2020 -- 12.3 Billion in Target Date Funds versus 2.5 billion in 2014 Improved Target Date Fund asset allocation which helped participants overall performance Increased passive implementation to 75% from 38% in 2014 Reduced operational complexity for UC Investments Reduced management fees by 65% (14 bps to 4 bps), saving 65 million in fees for participants over 6 years Over the next decade, participants will save another 150 million in fees Significantly increased direct communication of UC Investments with participants Significantly deepened collaboration and engagement with internal and external stakeholders Retirement Savings Program 3.0: Innovation around guaranteed income4

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SCosts Matter – Saved Participants 65 Million over 6 YearsAssets( Billion)As of 12/31/2020Number of FundsManagement Fees( Million)Management Fees(Basis Points)2014 18.774 26.2142015 18.974 25.9142016 18.916 18.2102017 20.915 20.8102018 22.613 13.062019 25.613 12.852020 31.513 11.745

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT STarget Date Funds become default in 2014Replacing the Savings Fund Billion2014201520162017201820192020Target Date Funds(Pathway) 2.5 2.6 5.3 6.1 8.8 9.4 12.3Savings Fund 3.8 4.4 4.2 4.2 4.0 4.0 4.16

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SImproved Asset Allocation helped participants’ performance7

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SActive and Passive FundsActive Funds (Cost)Passive Funds (Cost)Blend (Cost)UC Savings: (0.03%)UC Bond: (0.01%)UC Pathway Funds (0.04%)UC High Yield: (0.32%)UC Long Bond: (0.01%)UC Growth Company: (0.35%)UC TIPS: (0.01%)UC Diversified International: (0.48%)UC Short TIPS: (0.01%)UC Emerging Markets: (0.01%)UC Domestic Equity: (0.005%)UC International Equity: (0.01%)UC Real Estate: (0.01%)UC Small Cap Equity: (0.01%)UC Social Equity: (0.01%)Total Assets: 7.3 billionTotal Assets: 22.0 billion8

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SFocus on Asset Allocation through Passive tal100%100%100%100%100%100%100%100%9

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SInvestment Options at a GlanceTARGET DATE FUNDS - 12.3 billionUC Pathway FundsUC Pathway Income FundUC Pathway Fund 2020UC Pathway Fund 2025UC Pathway Fund 2035UC Pathway Fund 2040UC Pathway Fund 2045UC Pathway Fund 2030UC Pathway Fund 2050UC Pathway Fund 2055UC Pathway Fund 2060UC Pathway Fund 2065CORE FUNDS - 17.0 billionBond and Stock InvestmentsBond InvestmentsDomestic StockForeign StockShort-TermLarge CapDeveloped MarketsUC Savings FundUC Growth Company FundUC International Equity Index FundUC Diversified International FundIntermediate-TermSmall CapUC Bond FundInflation-ProtectedUC Short Term TIPS FundUC TIPS FundUC Domestic Small Cap Equity FundBroad CapUC Domestic Equity Index FundEmerging MarketsUC Emerging Markets Equity FundSpecialty StockUC Real Estate FundUC Social Equity FundBROKERAGE WINDOW - 2.2 billionFidelity BROKERAGELINK 10

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SCore Lineup Assets - DetailCORE FUNDS - 17.0 BillionBond and Stock InvestmentsBond Investments - 6,068Domestic Stock - 8,702Foreign/Global Stock - 1,439Short-TermLarge CapDeveloped MarketsUC Savings Fund - 4,107UC Growth Company Fund - 1,961UC International Equity Index Fund - 1,016UC Diversified International Fund - 180Intermediate-TermSmall CapUC Bond Fund - 1,520Inflation-ProtectedUC Short Term TIPS Fund - 79UC TIPS Fund - 362UC Domestic Small Cap Equity Fund - 555Broad CapUC Domestic Equity Index Fund - 6,186Emerging MarketsUC Emerging Markets Equity Fund - 243Specialty Stock - 804UC Real Estate Fund - 220UC Social Equity Fund - 58411

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SPathway our Target Date FundsLo ngS ho rtT ime HorizonPathway 2065Pathway Key FeaturesPathway 2060Pathway 2055Pathway 2050 An equity landing point of 35% with static allocations at andthrough retirementPathway 2045 Focus on diversification with broad asset class exposuresPathway 2040 Utilizes a strategic glidepath to help mitigate the risks associatedwith market timingPathway 2035U.S. Large Cap EquityU.S. Small/Mid Cap EquityInternational EquityKey Benefits for ParticipantsPathway 2030Emerging Market EquityReal Estate/CommoditiesU.S. Bonds/Short TermPathway 2025U.S. TIPSd Seeks to reduce volatility in an effort to keep participants savingand investing across market cyclesPathway 2020 Continuous research to anticipate, assess and adapt ahead ofevolving conditions to help meet participant needs now and in thefuturePathway IncomeH igherInv estment R isk Constructed to navigate the major sources of uncertaintyparticipants faceLo wer12

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SPathway focuses on the savings phaseRisks AddressedRisks RemainingAccumulationRiskLongevity RiskSequencing RiskRetirement Income Decision RiskInflation Risk13

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SIntroducing the Pathway Lifetime Income OptionImbed a lifetime income stream Option to purchase LifetimeIncome option (QLAC) using up to25% of account balanceintroduced at age 62 for allparticipants including active,retired and former employees Payments start at age 78 andcontinue through participant’slifetimeBuild yoursavings duringyour career withUC PathwaySpendyoursavings Includes pre-selected featuressuch as spousal option, deathbenefit, Cost-of-LivingAdjustmentAge 256278End of life14

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SCommunication CampaignJan 2021 – March 2021Retirement IncomeEducation Campaign Broad education aboutcreating retirementincome aimed atemployees and retireesage 59 and olderMar 2021 – Jun 2021Lifetime IncomeCampaign (Annual) Enrollment campaignaimed at employees andretirees age 62-69

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SPathway Performance - Quarter and 1 YearQ4 2020 performance relative to policy benchmarksNet of fee returns (%)Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway 065Fund .2215.22Policy Benchmark .2115.21Value 10.01One year performance relative to policy benchmarksNet of fee returns (%) - 12/31/2019-12/31/2020Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway 065Fund 17.94n/aPolicy Benchmark 18.07n/aValue -0.13n/a16

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SPathway Performance – 3 Year and 5 YearThree year performance relative to policy benchmarksNet of fee returns (%)Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway 065Fund 4n/aPolicy Benchmark 7n/aValue -0.13n/aFive year performance relative to policy benchmarksNet of fee returns (%)Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway Pathway 065Fund .58n/aPolicy Benchmark .64n/aValue .06n/a17

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SCore Funds PerformanceUS Large EquityUC Domestic Equity Index FundRussell 3000 TF IndexValue AddedUC Social Index FundSpliced Social IndexValue AddedUS Small/Mid Cap EquityUC Domestic Small Cap Index FunSmall Cap Spliced IndexValue AddedGlobal/World ex-US EquityUC International Equity Index FundMSCI World ex-US TF IndexValue AddedAnnualized Total Return (%)One Year Three YearFive Year21.1414.8615.7221.0614.6915.560.080.170.16Ten Year13.9413.810.13Market Value ( M) 6,186% of Program19.63%3 Months14.7014.71-0.01 0316.8616.92-0.0615.1815.28-0.10 13.1512.900.2511.8011.650.15 .307.880.425.615.230.3818

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT SCore Funds PerformanceCapital PreservationUC Savings FundMarket Value ( M) 4,107% of Program13.03%One 031.0722.508.5726.7920.676.1220.9116.933.98 0.077.542.537.675.622.05 12.0612.81-0.753.383.63-0.25 544.490.058.128.120.00Two-Year U.S. Treasury Notes Income ReturnValue AddedInflation SensitiveUC Short Term TIPS Fund 79Barclays 1-3 Year U.S. TIPS IndexValue AddedUC TIPS Fund 362Barclays US TIPS IndexValue AddedDiversified Fixed IncomeUC Bond Fund 1,520Barclays Aggregate Fixed Income BenchmarkValue AddedNew Large EquityUC Growth Company Fund 1,961Russell 3000 GrowthValue AddedWorld ex-US EquityUC Diversified Intl. FundMSCI EAFEValue AddedUC Emerging Markets FundMSCI Emerging Markets IndexValue AddedReal EstateUC Real Estate FundREIT Spliced IndexValue AddedAnnualized Total Return (%)Three YearFive Year1.481.431.681.433 Months0.160.03Ten Year1.340.910.4319

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT STarget Date Funds PerformanceTarget Date FundsUC Pathway Income FundPolicy BenchmarkValue AddedUC Pathway Fund 2020Market Value ( M) 1,813% of Program5.75%Policy BenchmarkValue 57.137.31-0.188.168.160.006.025.920.10 09.449.48-0.046.796.710.08 .1810.4410.48-0.047.407.330.07 .1711.0111.07-0.067.817.750.06Policy BenchmarkValue AddedUC Pathway Fund 2035-0.045.36%Policy BenchmarkValue AddedUC Pathway Fund 2030Ten Year4.254.01 1,689Policy BenchmarkValue AddedUC Pathway Fund 20253 Months5.905.94Annualized Total Return (%)One Year Three YearFive Year8.546.026.318.946.216.3020

UNI V ERS I T Y O F C A L I F O RNI AUC INV ES T MENT STarget Date Funds PerformanceAnnualized Total Return (%)Target Date FundsUC Pathway Fund 2040Policy BenchmarkValue AddedUC Pathway Fund 2045Policy BenchmarkValue AddedUC Pathway Fund 2050Policy BenchmarkValue AddedUC Pathway Fund 2055Policy BenchmarkValue AddedUC Pathway Fund 2060Policy BenchmarkValue AddedUC Pathway Fund 2065Policy BenchmarkValue AddedMarket Value ( M) 1,221% of Program3.87%3 Months13.5013.51-0.01One Year17.1717.38-0.21Three Year10.0110.16-0.15Five Year11.5211.59-0.07Ten Year8.188.120.06 1312.0112.08-0.078.538.470.06 1212.4612.54-0.088.878.810.06 1312.5912.64-0.059.078.990.08 1312.5812.64-0.069.209.130.07 60.02%15.2215.210.01----21

UC Pathway Funds. UC Pathway Income Fund UC Pathway Fund 2020 UC Pathway Fund 2025. UC Pathway Fund 2030. UC Pathway Fund 2035 UC Pathway Fund 2040 UC Pathway Fund 2045. UC Pathway Fund 2050. UC Pathway Fund 2055 UC Pathway Fund 2060. UC Pathway Fund 2065. CORE FUNDS - 17.0 billion Bond and Stock Investments

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