Trademark

Retirement

Retirement

We have a long tradition of helping retirement plan sponsors and plan participants invest for their retirement goals and objectives. Our innovative tactical risk managed solutions are designed to help our clients by mitigating their exposure to destructive market losses.

Retirement Plan Strategies

Plan sponsors today are faced with the challenge of choosing the right target-date solution for their participants. While it is important to take into account a TDF’s investment objective and glidepath methodology, it is also important to understand the fund’s ability to protect participants’ retirement savings during times of market volatility.

What makes Trademarks’ retirement series unique is our Tactical Risk Overlay – an allocation within each fund designed to provide significant downside protection. While dynamic, the percentage allocated to the Tactical Risk Overlay increases as an investor approaches their retirement age and throughout their golden years.

WHAT IS A COLLECTIVE TRUST FUND (CTF)?

Collective trust funds, also known as collective investment trusts (CITs), are pooled investment vehicles maintained by a bank or trust company. Like mutual funds, CITs combine the assets of various organizations to create a large, well-diversified portfolio, and their investors own shares of the CIT. Unlike mutual funds, CITs are available exclusively to qualified retirement plans, including 401(k) and certain government, pension, and profit sharing plans.

The defined contribution market has shown increasing interest in CITs because of their ability to satisfy plan sponsor demand for institutional-quality investment management, while potentially offering lower participant costs.

WHAT ARE THE POTENTIAL BENEFITS OF INVESTING IN A CIT?

Lower Cost:

CITs may have a lower fee structure than mutual funds because mutual funds typically charge shareholders for regulatory and administrative expenses as well as marketing and distribution costs.

Fiduciary Standards:

CIT Trustees are held to ERISA fiduciary standards, meaning that the bank must act solely in the best interest of the plan participants and beneficiaries.

Fee Structure Flexibility:

CITs are not limited by the retail mutual funds share class structure, which allows for greater pricing flexibility for both the advisor and plan sponsor.

HOW DOES A CIT DIFFER FROM A MUTUAL FUND?

CITs are regulated by the Office of the Comptroller of the Currency (OCC) or state banking laws and are subject to the Employee Retirement Income Security Act of 1974 (ERISA). CITs are not available to retail investors, and therefore are exempt from some of the regulatory requirements that apply to mutual funds, including registration with the SEC under the Investment Company Act of 1940.

WHO IS ELIGIBLE TO USE A CIT?

CITs are designed exclusively for tax-exempt, qualified retirement plans.

Trademark’s innovative Cash Balance Investment Solution (CBIS) has been developed to address the very specific requirements of a cash balance plan – to target the interest crediting rate of the 30 year Treasury bond yield.

Few products are available in the industry for these specific needs and of those the primary strategy has been to employ a heavy or exclusive allocation to fixed income investments. In the current low yield environment for fixed income this makes achieving the investment objective of cash balance plans difficult while increasing potential risk of loss should interest rates rise.

At Trademark, we believe a balanced approach INCLUDING an allocation to equity is important to achieve the return requirements for cash balance plans – but we also understand the consequences of losses. That is why we are well positioned to provide this need. Our philosophy is to protect from large losses by having the flexibility to tactically reduce (or remove) exposure to high risk market environments – and our portfolio managers have been doing it for clients since 1991.

The CBIS portfolio was developed to address the specific needs of cash balance pension plans. Most cash balance pension plans need a steady return equal to the 30-year Treasury bond yield, or slightly in excess of that benchmark, with low volatility. Our portfolio is constructed to target this benchmark and benefits from Trademark’s overriding emphasis of capital preservation during periods of market unrest. We tactically manage our exposure to both the equity and fixed income positions to avoid unnecessary risks during down markets.

The CBIS strategy is innovative in that it also protects returns when the benchmark rate is achieved during the year. This is monitored on a calendar year basis. No matter when the benchmark return is achieved during the year, once it has been reached the strategic allocation is moved to more fixed income to protect the gains.

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