Registered investment adviser (RIA), “The Absolute Return,” based in Ann Arbor, Mich., designed each portfolio to target a rate of return higher than the “risk-free rate,” as measured by the yield of the 3-Month Treasury Bill. Annualized return targets range from 8% for an income-oriented portfolio to 15% for growth-oriented long/short portfolios relative to this risk-free rate, net of fees.
“We believe the economy is in a long-term period of sluggish growth where conventional investment methods will fail to deliver the rates of return people expect or require of them,” said Bob Palmerton, CEO of The Absolute Return.
Each portfolio is also actively managed to a portfolio volatility target using a measure called “drawdown” where drawdown targets, or maximum drop in monthly portfolio values from the previous peak, range from 4% for the income portfolio to 10% for the long/short portfolios.
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Workers Not Maximizing Potential of Retirement Plans
A recently commissioned survey indicates that employer-sponsored retirement plans are highly important to the workers who participate in them, but most are not
maximizing their savings power.
The ING Retirement Research Institute
study found that a majority of workers (87%) said they could be saving more
in their employer-sponsored retirement plan. Of the 1,000 workplace
retirement plan participants surveyed, nearly two-thirds (64%) said
their employer-sponsored retirement plan accounts for all or most of
their retirement portfolio.
According to a press release, the survey indicated that
plan participants lack a clear understanding of contribution rates and
the lifetime value of even small increases. When asked to estimate the
lifetime value of a 2% increase in their contribution rate, 40% of
respondents underestimated by 50% or more and just about a third (32%)
over-estimated by 50% or more.
For many workers, setting
contribution rates appears to be either a guess or a
back-of-the-envelope calculation, the announcement said. Very few respondents consulted outside resources in determining their
contribution levels. Nearly two-thirds (65%) determined their
contribution rate themselves, and one in five (21%) said they “go by gut
feeling.”
The survey also found that of those participants not
contributing the maximum to their retirement plan, an overwhelming
majority (87%) admitted they could afford to increase their annual
contribution by 1% of their annual salary; almost six in ten (59%) said
they could up their contribution by 3% of salary; and nearly one third
(32%) said they could afford a 5% increase.
(Cont...)
The Importance of a Workplace Retirement Plan
Forty-four
percent of plan participants polled admitted that if they didn't have a
retirement plan at work, they probably wouldn't be saving for
retirement at all. Most respondents (58%) said their employer-sponsored
retirement account is their first investment and over half (52%) said
their plan is the main place they learned about investing.
More
than two out of five (42%) said all or most of their investment
knowledge comes from managing their employer-sponsored retirement
account.
Respondents cited their employers as
having the most influence in getting them to start saving for
retirement, followed by family and friends, according to the press
release. In addition, their employer match was cited by most
participants as the most important reason they contribute to their
workplace plan.
Still, over half (55%) of
respondents agreed that if their employer provided them with more
detailed education, they might contribute more to their plan.
Seventy-two percent said they wish their company customized information
for their personal situation.
"For many working
Americans, an employer-sponsored retirement plan isn't simply a stepping
stone into the investment world, it's the foundation for their future
investing education and financial decision-making," said Catherine
Smith, CEO, ING U.S. Retirement Services, in the announcement. "The
lessons learned in managing a workplace retirement plan are critical,
and they can make the difference between a long and comfortable
retirement and a retirement that falls well short of their dreams and
goals."