At
MainePERS, we’ve done the hard
work to make saving simple,
effective, and affordable. After
thorough research, we have
assembled a program to meet your
needs.
Low Cost
Convenience
Your Asset Allocation
Investments in Bonds and
Money-market Funds
Professional Investment
Managers
Balanced Option Fund
Broad Market Index Funds
Low Cost
High fees charged by mutual fund
managers can impose a heavy drag
on investment results. Many
funds offered in the market
today impose fees well in excess
of 1% of your investment.
Investment management fees,
transaction fees, administration
fees, marketing fees, and other,
sometimes hidden, fees can drive
up costs, and since the average
mutual fund will provide a
return just equal to the overall
market over time, each of these
fees and transaction costs will
reduce your return to below the
average. Clearly, minimizing
cost is an important part of
achieving satisfactory
investment results.
MainePERS has chosen to offer
index funds from a highly
regarded nonprofit fund
management company in order to
minimize costs to you. These
funds are among the lowest cost
in the industry. They do not
have marketing or distribution
fees associated with them, and
they do not “share revenue” with
DC plan administrators. There
are no upfront sales charges or
back end redemption fees (with
the exception of an early
redemption fee for the
international fund), both of
which are typical in the
universe of mutual funds, and
which can cost as much as 5% or
more of your assets and are not
included in the stated expense
ratio or management fee. There
are no hidden fees. In addition,
transaction costs are minimized
in index funds, further limiting
costs to you.
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Convenience
MaineSTART makes it easy to
enroll, make, or change your
investment choices, and view
your progress. Call 1-888-401-5629. or log on to
ACCOUNTTRAX any time, 24/7.
Because MaineSTART works through
payroll deduction, you can make
systematic savings a simple and
powerful tool in your long-term
financial plan.
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Asset Allocation
“Asset allocation” refers to the
proportions of your savings that
are invested in different types
of investments: for example,
U.S. stocks, foreign stocks,
Treasury bonds, real estate,
etc. Studies have shown that
your asset allocation will play
a far greater role in your
success than the specific funds
you choose.
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Investments in bonds and
money-market funds
For most savers, the greatest
opportunity for long-term
returns comes from investing in
stocks, and the greatest
stability comes from investments
in bonds and money-market funds.
Finding the right mix depends on
when you need the funds to be
available — your time horizon —
and your ability to tolerate
risk. Maintaining the right mix
involves revisiting those
factors every so often, and
rebalancing your investments
(because different investments
grow at different rates) to
return to the “right”
allocation.
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Professional Investment Managers
For savers who want the benefit
of professional investment
managers making these asset
allocation decisions for them,
MaineSTART offers a selection of
so-called lifecycle or target
retirement date mutual funds.
These funds relieve you of the
burden of asset allocation,
rebalancing, and fund selection
by basing your investment on a
retirement date of your choice.
After you select the fund that
most closely matches your
planned retirement, a
professional money manager then
chooses an asset allocation in
the early years that assumes
greater risk, changing the
allocation over time to reduce
risk as your target retirement
date nears. For the vast
majority of our participants, we
think this is the most
appropriate investment vehicle
for their retirement savings.
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Balanced Option Fund
For participants who want the
benefit of professional
management, but want to have a
constant asset allocation,
MaineSTART offers a balanced
option fund. A balanced fund is
a fairly stable mix of stocks
and bonds, and may be
appropriate for those with
slightly higher risk tolerances.
Keep in mind that the risk level
of this fund is not designed to
decline as you near retirement.
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Broad Market Index Funds
Finally, for savers who want to
customize and control their
asset allocation, MaineSTART
offers an array of broad market
index funds. These funds help
you with the allocation process
by greatly simplifying it. The
key decision is how much you
want to invest in each type of
asset. By using broad market
funds, the participant can be
assured they are getting
appropriate diversification
within each asset type, an
important quality for any
portfolio. While participants
are free to use these funds
either by themselves or in
conjunction with the other
options, this option is most
appropriate for those well
versed in finance and portfolio
construction.
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Low-cost Vanguard®
funds