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Automatic Rebalancing of Investments in Retirement Plans
May 27, 2008, Volume 54, No. 34

How long has it been since you took a look at the investment mix in your retirement account? Most investors prefer to maintain a balance of various types of investments, in order to reduce their risk. But depending on how the funds in your account have performed, your overall investment mix may be very different than you thought it was—or want it to be.

The reason for this is simple: the funds in your account don’t all gain or lose value at the same rate. You may have chosen to invest equal amounts in several different funds, but if one of those funds dramatically outperforms the others, the balance of your investments will shift.

One easy way to make sure your account doesn’t stray too far from your desired investment mix over time is to take advantage of the automatic rebalancing features offered by both TIAA-CREF and Vanguard. Automatic rebalancing allows your account provider to maintain your diversification strategy by making regular adjustments to your account. This way, even as market conditions change, your overall investment mix will stay on target. Nothing can remove the risk from investing completely, but having a balanced retirement portfolio can reduce it significantly.

Vanguard investors can enroll in automatic rebalancing through www.vanguard.com or by calling a Vanguard Participant Services associate at 1-800-823-1188 Monday through Friday between 8:30 a.m. and 9 p.m. TIAA-CREF investors can enroll in automatic rebalancing through www.tiaa-cref.org, or by contacting TIAA-CREF at 1-877-PENN-RET (1-877-736-6738). You can cancel automatic rebalancing at any time.

Please keep in mind that normal redemption fees still apply to investment changes made by an automatic account rebalance. More information about Penn’s retirement plans is available from the Human Resources website at www.hr.upenn.edu/Benefits/Retirement, or from the Penn Retirement Call Center at 1-877-PENN-RET (1-877-736-6738).

—Division of Human Resources









Almanac - May 27, 2008, Volume 54, No. 34