2013 Year in Review. Wherever you are Wherever you are going

Transcription

1 2013 Year in Review Wherever you are Wherever you are going

2 2013 Major events Debt ceiling/fiscal cliff/government shutdown Began 2013 with fiscal cliff drama Ended 2013 debt ceiling crisis 16-day government shutdown Fed taper Will they/won t they? Asked at every FOMC meeting 12 months later Announce tapering bond buying -10 billion/month Stock market jumped 2% *Source: Yahoo Finance 12/30/13 Page 2

3 2013 Major events Foreign unrest North Korea: nuclear threat Syria: civil war, genocide, chemical weapons Extreme weather Hurricanes, tornadoes, typhoons Devastating snow and cold Affordable care act Dubious roll out Costs/coverage *Source: Yahoo Finance 12/30/13 Page 3

4 2013 Major events Unemployment at 7% Private sector strong True number or reflects number of seekers who have dropped out? Economy grows Strong final quarter 3% growth Housing market Momentum has slowed Construction up 17% *Source: Yahoo Finance 12/30/13 Page 4

5 Good news/bad news = strong returns Bull market continues Present = 60 months Average bull market period = 31 months Small caps up 38.8% *Source: BoA Merrill Lynch Global Research, Bloomberg, About.com, Investopedia, (May 5, 2013) Page 5

6 Strong market returns Staying power S&P 880 days without a 10% or greater drop Industry sectors Top performers Health care Consumer discretionary Industrials All up more than 40% Worst performer Utilities (up 13%) Telecom (up 11%) *Source: JP Morgan Guide to the Markets (12/31/13) and BMO GAM Retrospective and Perspective (1/6/14) Page 6

7 2013 overseas markets PIIGS (Portugal, Italy, Ireland, Greece, Spain) Problem countries, fear of bankruptcy Strong rebound Developed markets Larger foreign countries rebound Recession over in Europe? Top performer = Japan BRIC (Brazil, Russia, India, China) Emerging markets, the darlings for years, struggled in 2013 Worst performer = Brazil *Source: JP Morgan Guide to the Markets (12/31/13) and BMO GAM Retrospective and Perspective (1/6/14) Page 7

8 2013 world results *Source: BMO Economy and Markets 1/6/13 Page 8

9 Investing strategies - chasing returns Diversification does not ensure a profit or guarantee against a loss. Page 9

10 2014 issues U.S. debt ceiling February Will a bi-partisan decision happen? Yes with no concessions Fourth quarter corporate earnings Strong report = strong stock market Impact on unemployment numbers Affordable health care act Is the formula working? How many have enrolled? Fed tapering project Is the economy strong enough to grow on its own? *Source: JP Morgan Guide to the Markets (12/31/13) and BMO GAM Retrospective and Perspective (1/6/14) Page 10

11 2014 issues Severe weather continues Profits/sectors affected Consumer spending down Ukraine Putin s involvement, markets swing Mini correction Late January 6% drop Contributors Asia and emerging markets Disappointing manufacturing, housing and retail numbers Time to panic? Market has recouped the loss already Page 11

12 What to do? Don t follow the herd Stock market at record highs Continue to participate take advantage of dollar cost averaging 1% to 85% Pre-tax Roth after-tax Combination of the two 2104 IRS limits: $17,500 and up to an additional $5,500 for catch up Changes available at any time Match $1.00/1.00 on the first 4% and $0.50/$1.00 on the next 2%, deposited pre-tax and vested immediately Page 12

13 What to do? Understand what type of investor you are Hands on or hands off Assess your current situation Has something changed? Goals, timeframe, risk tolerance Portfolio check up Time to rebalance? Page 13

14 Investment options Individual Funds - Build your own Target Date Funds - Managed for age Risk Based Funds - Managed for risk For more complete information, please contact your plan sponsor. A mutual fund prospectus, collective fund disclosure statement, or other applicable fund information can be obtained from your plan sponsor. You should carefully consider the fund s investment objectives, risk, charges, and expenses before you invest. Information about these and other important subjects is in the fund s prospectus, collective fund disclosure, or other applicable fund information, which you should read carefully before investing. Page 14

15 Risk profile The allocation planner provides hypothetical examples and are not intended to represent past or future performance of a specific investment which cannot be predicted or guaranteed, or to provide specific advice to any individual. Rates of return will vary over time. These investments offering a higher rate of return also involve a higher degree of risk. The suggestions provided in this planner apply to your entire financial picture, of which your retirement plan is a portion. Page 15

16 Individual funds High Return Potential Other International Small Cap Core Mid Cap Growth Multi Cap Core Large Cap Growth Large Cap Core Fixed Income Stable Value Low Investment Risk High Small cap stocks are less liquid and more volatile than large cap stocks. International investing involves special risks due to factors such as increased volatility, currency fluctuation and political uncertainties. The risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established marks and economies. Page 16

17 Automatic rebalance December 20 Investment strategy 30% 10% 60% Stock Bond Cash 10% 10% 80% Stock Bond Cash Account position Page 17

18 FA Freedom options Return Potential High FA Freedom 2055 FA Freedom 2050 FA Freedom 2045 FA Freedom 2040 FA Freedom 2035 FA Freedom 2030 FA Freedom 2025 FA Freedom 2020 FA Freedom 2015 FA Freedom 2010 FA Freedom 2005 FA Freedom 2000 Income Fund Low Investment Risk High The Fidelity Advisor Freedom Funds are represented on a separate investment spectrum because each fund (except Fidelity Advisor Freedom Income) will gradually adjust its asset allocation to be more conservative as the fund approaches its target retirement date. Approximately ten to fifteen years after the target date, the asset allocation of each Freedom Fund will match the allocation of the Freedom Income Fund. The spectrum illustrates the relative risk and return of each fund as compared with the other funds in the Freedom family. This spectrum does not represent actual or implied performance. The Advisor Freedom Funds are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high yield, small-cap, commodity-linked, and foreign securities. Principal invested is not guaranteed at any time, including at or after the target dates. Strategic Advisers, Inc., a subsidiary of FMR LLC, manages the Fidelity Advisor Freedom Funds.

19 FA Freedom glide path This table illustrates the approximate target asset allocation for Fidelity Advisor Freedom Funds and how these allocations may change over time. Due to rounding and/or cash balances, asset allocations may not equal 100. Asset allocation percentages are based on long-term strategic weights and may not necessarily align with actual current weights. This table is not intended to represent current or future allocations in any Portfolio. The portfolio manager will periodically rebalance the portfolios as market conditions and the funds performance weightings change. Underlying funds normally invest in commodity-linked notes and other instruments that may be more volatile and less liquid than the underlying commodities whose performance the fund aims to reflect. # Includes developed and emerging market funds. Treasury Inflation-Protected Securities.

20 What to do? Page 20

21 Model risk based portfolios High Return Potential Conservative (40% stock & 60% bonds) Aggressive (100% stock) Growth (80% stock & 20% bonds) All Weather (60% stock & 40% bonds) Low Capital Preservation (20% stock & 80% bonds) Investment Risk High All information on the model portfolios has been provided to BMO by CAPTRUST who is solely responsible for its content Page 21

22 Run your numbers Page 22

23 BMO Retirement App now available Visit mybmoretirement.com/mobile Download app Use your unique logon credentials If you haven t already established logon credentials, visit mybmoretirement.com

24 Funtionality Check your account balance View personal rates of return Review contributions Monitor investment performance

25 Access your accounts mybmoretirement.com My BMO Retirement Line Select Option #1 BMO Retirement Services Specialists Select Option #2

26 Target Fund Disclosures The target date refers to the approximate year when an investor in the Fund would start withdrawing from the investment, which is assumed age 65. The principal value of the Retirement Funds is not guaranteed at any time, including at or after the target date. The funds invest in a broad range of underlying mutual funds that include stocks, bonds, and short-term investments and are subject to the risks of different areas of the market. The funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus more on income and principal stability during retirement. The funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility. The performance of a target retirement date portfolio depends on the strategic asset class allocation of the portfolio, the manager s selection and mix of underlying funds and the performance of the underlying funds. As with any portfolio, past performance is no guarantee of future results. There is no guarantee that the portfolio will achieve its objective, or your retirement objectives. The portfolio s share price fluctuates up and down, which means you could lose money by investing in the portfolio. You may experience losses near, at, or after the target retirement date of the portfolio, and there is no guarantee the portfolio will provide adequate income during your retirement. The investment risks of each Target Fund changes over time as its asset allocation changes. They are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad and may be subject to risks associated with investing in high yield, small cap, commodity-linked, and foreign securities. Principal invested is not guaranteed at any time, including at or after their target dates. For more complete information, please contact your plan sponsor. A mutual fund prospectus, collective fund disclosure statement, or other applicable fund information can be obtained from your plan sponsor. You should carefully consider the fund s investment objectives, risk, charges, and expenses before you invest. Information about these and other important subjects is in the fund s prospectus, collective fund disclosure, or other applicable fund information, which you should read carefully before investing. Investment products are: Not FDIC Insured No Bank Guarantee May Lose Value

27 Definitions The Standard & Poor s Mid-Cap 400 Index is an unmanaged index of common stocks comprised of 400 industrial, financial, utility and transportation companies. The S&P 500 Index is an unmanaged index comprised of 500 widely held securities considered to be representative of the stock market in general. Investments cannot be made in an index. Small cap stocks are less liquid and more volatile than large cap stocks. The MSCI EAFE Index is an unmanaged index consisting of approximately 1,000 stocks in 21 developed countries outside of North and South America. It represents approximately 85% of the total market capitalization in that country. International investing involves special risks due to factors such as increased volatility, currency fluctuation and political uncertainties. Commodity-linked investments may be more volatile and less liquid that the underlying commodity, instruments, or measures and their value may be affected by the performance of the overall commodities markets as well as weather, tax and other regulatory developments. Fixed income investments entail interest rate risk (as interest rates bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic and political risks. The Russell Top 200 Index is a benchmark index for U.S.-based large-cap stocks; the average member has a market cap above $100 billion. The index is reconstituted annually to account for new members and growing companies. The Russell Top 200 Value Index measures the performance of the especially large cap segment of the U.S. equity universe represented by stocks in the largest 200 by market cap that exhibit value characteristics. It includes Russell Top 200 Index companies with lower price-to-book ratios and lower forecasted growth values. These stocks also are members of the Russell 1000 Value Index.

28 Definitions (cont.) The Russell Top 200 Growth Index offers measures the performance of the especially large cap segment of the U.S. equity universe represented by stocks in the largest 200 by market cap that exhibit growth characteristics. It includes Russell Top 200 Index companies with higher price-to-book ratios and higher forecast growth values. The companies also are members of the Russell 1000 Growth Index. The Russell MidCap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. The Russell MidCap Growth Index measures the performance of those Russell Midcap companies with higher price-to book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth index. The Russell MidCap Value Index measures the performance of those Russell Midcap companies with lower price-to book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value index. The Russell 2000 Index is an unmanaged index comprised of approximately 2,000 of the smallest U.S. securities in the U.S. market and accounts for approximately 10% of U.S. stock market capitalization. The Russell 2000 Value Index tracks the performance of those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher price to-book ratios and higher forecasted growth values.

29 Disclosure BMO Retirement Services is a part of BMO Global Asset Management and a division of the BMO Harris Bank N.A., offering products and services through various affiliates of BMO Financial Group. BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management, retirement, and trust and custody services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Those products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal (BMO). This presentation is for educational purposes. No investment strategy can guarantee a profit or protect against loss. Regular investing does not ensure a profit or protect against a loss in a declining market. For more complete information regarding the funds in your plan, call You should consider the fund s investment objectives, risks, charges and expenses carefully before investing. Information about these and other important subjects is in the fund s prospectus, which you should read carefully before investing. Investment products are: NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE 2014 BMO Financial Corp.