Table of Contents
- Q2 2025 Vista Plan Performance and Market Conditions
- June 2025 Plan Performance Chart
- Why Choose a 401(k)?
- American Funds Target Date Funds Explained
- Why Choose to Contribute a Percentage?
- Nuts and Bolts – How to Invest Your DROP Funds
- The Drop Box
- Helpful Hints
Welcome to Vista 401(k)!
Q2 2025 Plan Performance
By Constantine Mulligan, Director of Investments Partner, Cerity Partners LLC
Considering the developments across markets and the global economy, the investment implications for retirement plan participants remain centered on discipline, diversification, and cost efficiency. Markets enjoyed a considerable rebound in the second quarter, as fears of global trade were assuaged to an extent, while corporate earnings and general fundamentals remained strong across region and sector. With respect to the Plan, participants continue to have access to a well-diversified mix of investment options, with a quick summary below.
- Equity allocations, both domestic and international, continue to be supported by stable earnings growth and accommodative monetary policy. Plans with exposure to quality growth managers and international equities have particularly benefited in the current environment this past quarter.
- Fixed income strategies should remain a source of ballast, particularly as rate cuts begin to materialize. Active duration management and quality credit selection are key in navigating the evolving rate environment, as the Plan’s Lord Abbett strategy has routinely demonstrated.
- Stable value funds, such as the guaranteed interest account in the Plan, are performing well and remain important for conservative participants or those nearing retirement.
- Target date strategies that emphasize global diversification and prudent risk management have demonstrated strong relative performance and remain well-positioned for long-term retirement outcomes. The current American Funds product continues to be a compelling option.
While uncertainty around tariffs and fiscal policy remains, markets appear to be absorbing these risks constructively. As always, maintaining a long-term perspective and adhering to a well-structured investment policy remains the most effective path to participant success.
The Plan’s thoughtfully diversified investment approach, spanning market cap, region, and sector, remains a strong foundation for long-term success. While capital markets faced challenges this past quarter, the Plan continues to offer a broad and resilient lineup of options designed to support participants in achieving their retirement goals with confidence.
FOR OUR CLIENTS WHO WISH TO TAKE A DEEPER DIVE, WE HAVE PROVIDED THE FOLLOWING ECONOMIC AND MARKET COMMENTARY. THIS WILL PROVIDE AN EXPLANATION OF THE OVERALL MACRO AND MICRO ECONOMIC FACTORS INFLUENCING THE MARKETS AND, IN TURN, YOUR VISTA 401(K) ACCOUNT. IF YOU HAVE ANY QUESTIONS OR WISH TO DISCUSS THESE MATTERS IN GREATER DETAIL, PLEASE CONTACT US AT (866) 325-1278 OR E-MAIL US AT 401K@VISTA401K.COM.
2nd Quarter 2025 Economic/Market Recap & Outlook
Following a modest contraction in the first quarter, the U.S. economy rebounded in Q2 2025, driven largely by consumer strength and a normalization in trade flows. While a sharp rise in imports ahead of expected tariff increases weighed on Q1 GDP, the second quarter displayed balanced dynamics. Consumer spending, supported by job and income growth, remains the main engine of expansion. However, a gradual slowdown in spending suggests a more moderate growth path for the second half of the year.
Restrictive monetary policy and continued uncertainty surrounding the long-term impact of tariffs are expected to weigh on both consumer and corporate spending. That said, healthy household and corporate balance sheets should help cushion against sharper declines. While GDP growth for the remainder of 2025 may fall below historical trend, most forecasters do not anticipate a recession this year or next. The housing sector remains a weak spot. High mortgage rates and persistently elevated home prices continue to erode affordability, limiting activity. Though there are early signs that the market may be bottoming, a clear catalyst for recovery has not yet materialized.
Globally, trade tensions remain a significant variable. Negotiations in Q2 revealed the U.S. administration’s broader goal of reshaping global trade flows in favor of domestic manufacturing. While most countries are engaged in cooperative talks, China stands out as an exception, with U.S. policy seeking not just concessions but also long-term rebalancing. Analysts also believe that tariff revenue is being positioned as a partial offset to the cost of proposed tax cuts in current budget negotiations.
In Europe, economic growth is sluggish but still positive, hovering just above or below 1.0%. Inflation is largely under control, enabling central banks to maintain accommodative policy. A surprise uptick in defense and infrastructure spending, partly in response to reduced U.S. NATO contributions, is providing a welcome boost to demand and helping offset the impact of U.S. tariffs.
China’s ambitious 5.0% GDP target for 2025 looks increasingly difficult to achieve given persistent overcapacity, an entrenched property sector downturn, and a more constrained export outlook. Growth of around 4.5% is more realistic unless the government adopts more aggressive stimulus measures. Japan is also vulnerable to U.S. trade friction, with domestic demand likely unable to fully offset export weakness. Growth there is expected to remain below 1.0% in 2025.
The Federal Reserve continues to adopt a patient stance, taking time to evaluate the economic effects of new trade policy measures. Internal differences are beginning to emerge within the Federal Open Market Committee (FOMC), with some members open to resuming rate cuts should inflation drift closer to the Fed’s 2% target or if signs of labor market weakness intensify.
While political pressure, particularly from the executive branch, has increased the probability of near-term easing, the consensus outlook favors a rate cut in September, when more data on inflation and economic momentum will be available. A second cut in December is also likely as the forecasted economic deceleration becomes more evident.
In Europe, the European Central Bank (ECB) has already reduced its key deposit rate by 200 basis points over the past year, bringing it to 2.0%. With inflation stabilizing and economic activity soft, the ECB is likely nearing the end of its easing cycle. The Bank of England is expected to implement two additional 25-basis-point rate cuts before year-end, aiming to support economic growth against the backdrop of trade-related headwinds. The Bank of Japan has taken a more conservative approach, surprising markets by holding off on rate increases despite having met its inflation target. Given the fragile domestic backdrop and trade-related risks, Japan’s central bank is prioritizing stability. Meanwhile, the People’s Bank of China continues to make incremental easing moves, using small interest rate cuts and reserve requirement reductions to stimulate demand without risking capital outflows.
Bond markets in the U.S. are beginning to reflect concerns over the growing fiscal deficit and the increasing supply of Treasury securities. Weak demand in recent Treasury auctions has raised questions about investor appetite for new issuance, particularly as fiscal discipline appears to be lacking in an otherwise expanding economy. Despite this, yields on the 10-year U.S. Treasury remained within a relatively narrow range of 4.00% to 4.50% during the first half of 2025. As economic growth moderates and the Fed re-enters a rate-cutting cycle, yields are expected to move toward the lower end of this range and could even break below 4.00%. Shorter-dated bonds are likely to outperform in this environment, resulting in a steeper and more traditionally upward-sloping yield curve.
High-yield corporate bond spreads widened significantly in Q2 following the initial announcement of aggressive tariffs, reflecting investor concerns over increased risk. However, as rhetoric softened and trade deals began to materialize, spreads narrowed, returning to levels near the start of the year. Overall, credit conditions remain healthy, though vigilance is warranted.
U.S. equity markets experienced a textbook correction in the first half of the year, driven largely by tariff-related uncertainty and earnings recalibrations. Encouragingly, markets have since recovered fully, with the S&P 500 entering Q3 on firmer footing. Earnings expectations for 2025 remain solid, with consensus forecasts projecting 9.0% year-over-year growth. The recovery in equities was led once again by large-cap technology, communication services, and consumer discretionary stocks. While market breadth has improved slightly, performance remains concentrated in a handful of leading names. Should trade-related uncertainty ease and fiscal policy become more supportive, markets could see broader participation in the months ahead.
From a retirement plan perspective, adherence to long-term asset allocation has been rewarded. Global diversification has paid off this year, as non-U.S. equities, particularly in Europe, have outperformed domestic peers. Monetary and fiscal tailwinds on the continent, combined with attractive valuations and currency appreciation, contributed to strong returns for developed international equities. Emerging markets also posted positive year-to-date performance, although headline results were muted by continued weakness in China. A cautious stance remains appropriate in this region, as policy support from Beijing has been measured and the impact of new tariffs on Chinese exports is not yet fully known.
June 2025 Fund Performance Chart
Why Choose a 401(k)?
Why Choose the Vista 401(k) Plan as Your Retirement Plan?
Saving for retirement is one of the most important financial decisions you'll make, and the sooner you start, the better off you'll be. Among the many options available, the Vista 401(k) plan stands out as one of the most effective and accessible retirement savings vehicles. The Vista 401(k) plan offers a combination of tax advantages and investment options that make it a compelling choice for building long-term financial security. The following offers several reasons to choose the Vista 401(k) plan.
Tax Advantages that Accelerate Growth
One of the strongest benefits of the Vista 401(k) plan is its favorable tax treatment. With a traditional 401(k), contributions are made with pre-tax income, which lowers your taxable income for the year. For example, if you earn $70,000 and contribute $10,000 to your Vista 401(k) account, your taxable income is reduced to $60,000. This can lead to immediate tax savings and may even lower your tax bracket.
In addition to the upfront tax break, the money in your Vista 401(k) account grows tax deferred. That means you don’t pay any taxes on interest, dividends, or capital gains while the money remains in the account. This tax-deferred compounding can lead to significantly larger retirement savings over time.
High Contribution Limits Encourage Aggressive Saving
Compared to other retirement accounts like IRAs, the Vista 401(k) plan allows for much higher annual contributions. As of 2025, the annual contribution limit is $23,500, with an additional $7,500 catch-up contribution allowed if you are age 50 or older. These higher limits make it easier to save aggressively, especially if you’re trying to make up for lost time or want to retire early.
Convenient and Automatic Saving
One of the reasons people struggle to save for retirement is simply failing to follow through. The Vista 401(k) plan makes saving effortless by automatically deducting contributions from your paycheck. This “set it and forget it” system helps you build wealth consistently without having to think about it each month. It also removes the temptation to spend that money elsewhere.
Diversified Investment Options
The Vista 401(k) plan offers a variety of professionally managed investment options, such as mutual funds and target-date funds. These choices allow you to build a diversified portfolio that aligns with your risk tolerance and retirement timeline. Target-date funds, in particular, are designed to automatically adjust your investment mix as you approach retirement, making them ideal for hands-off investors.
Portability and Long-Term Flexibility
You can roll a variety of qualified retirement plans into your Vista 401(k) account, to include DROP funds, without paying taxes or penalties. This flexibility ensures your savings stay with you throughout your career, no matter how many times you change employers.
Conclusion
Choosing the Vista 401(k) plan as your retirement plan is a smart, strategic decision that offers long-term rewards. With generous tax advantages, high contribution limits, automatic payroll deductions, and a range of investment options, the Vista 401(k) plan is built to help you prepare for retirement. Whether you're just starting out or nearing retirement, contributing regularly to your Vista 401(k) account can put you on the path to a secure and comfortable future.
Don’t leave your retirement to chance—start building your Vista 401(k) account today.
American Funds Target Date Funds Explained
Why Consider a Vista 401(k) American Funds Target Date Fund?
You’ve signed up for the Vista 401(k) Plan—great! Now, how should you invest your savings? This is one of the biggest questions many participants have. The Vista 401(k) Plan includes a smaller, well-designed menu of funds to select from, but sometimes the choice can still feel overwhelming—especially for those without investment experience. That’s where American Funds target date funds (TDFs) come in. These investment vehicles are designed to simplify retirement saving by offering a diversified, professionally managed portfolio that adjusts over time to match your changing needs.
What Is a Target Date Fund?
A target date fund is a type of mutual fund that automatically adjusts its asset allocation based on a specific retirement year, known as the “target date.” For example, if you plan to retire around 2050, you might choose a TDF labeled “Target Retirement 2050.” Early on, the fund will hold more growth-oriented investments like stocks. As the target date of 2050 approaches, it will gradually shift toward more conservative investments such as bonds and cash equivalents. This automated process is known as a glide path, and it's designed to reduce risk as you approach retirement.
Simplified Investment Strategy
One of the most compelling reasons to consider a target date fund in your Vista 401(k) is simplicity. TDFs offer a "set-it-and-forget-it" solution. Rather than trying to build and rebalance a diversified portfolio on your own—a process that requires time, effort, and financial know-how—a target date fund does the work for you. This is especially beneficial if you are early in your career or lack investment experience.
Professional Management and Diversification
Target date funds are managed by professional investment teams who ensure the fund maintains a diversified mix of assets appropriate for your age and risk tolerance. Most TDFs invest in a blend of U.S. and international stocks, bonds, and other asset classes. This diversification helps reduce the impact of market volatility and increases the chances of steady growth over time.
Automatic Rebalancing
As markets fluctuate, a portfolio's asset allocation can drift away from its original targets. TDFs automatically rebalance to maintain the appropriate mix. For example, if stocks perform well and become an outsized portion of the portfolio, the fund will sell some stocks and buy more bonds to restore balance. This feature helps reduce emotional decision-making and keeps your investment strategy on track.
Ideal for Long-Term Retirement Planning
Target date funds are designed to span several decades and are particularly well-suited for long-term investors saving for retirement. They are structured to potentially grow your money in the early years and preserve it as retirement approaches. This evolving strategy aligns with the typical investor’s lifecycle and reduces the need to frequently monitor or adjust your portfolio.
A Smart Choice in Your 401(k)
The Vista 401(k) plan offers target date funds as a default investment option—and for good reason. These funds align with key principles of successful retirement investing: start early, stay diversified, and manage risk over time. If you’re unsure about how to invest in your Vista 401(k) account, a target date fund is a smart, low-maintenance choice that may help guide you toward a secure financial future.
It’s a solution with the potential to grow with you—and grow for you.
Why Choose to Contribute a Percentage?
Contribute a Percentage to Your Vista 401(k) Account
When enrolling in a Vista 401(k) retirement plan, you are given the option to contribute either a fixed dollar amount or a percentage of your paycheck. While both methods help you save for retirement, contributing in percentage form is usually the better choice—and here's why.
Percentage Contributions Grow with You
One of the biggest advantages of contributing in percentage form is that your contribution automatically grows as your salary increases. If you choose to contribute, say, 10% of your salary, and you get a raise, your contribution amount increases along with your pay. This helps ensure that your retirement savings keep pace with your income and lifestyle.
On the other hand, if you select a fixed dollar amount—such as $200 per paycheck—your savings rate stays the same, even if your salary increases. Over time, this could result in you saving a smaller percentage of your income and potentially falling short of your retirement goals.
Stay on Track with Retirement Goals
Financial experts generally recommend saving at least 10% to 15% of your income for retirement. If you use a percentage-based contribution it makes it easier to align with these benchmarks. You always know what proportion of your income is going toward your future.
With a dollar amount, it’s easy to lose sight of whether you’re actually saving enough. A $100 contribution might have been 10% of your income early in your career, but later, it could be just 5%—or even less—as your earnings grow. Without regular review and adjustments, you might unintentionally under-save for retirement.
Budgeting and Consistency
Percentage-based contributions adjust automatically with changes in your pay—such as raises or bonuses—so you don’t have to manually update your contributions each time your income changes. This makes budgeting easier and ensures consistent retirement saving.
It also helps you maintain a pay-yourself-first mentality. By taking a percentage off the top before you even see your paycheck, you're prioritizing your financial future in a way that becomes part of your normal budget.
Keep Ahead of Inflation
Inflation gradually erodes the purchasing power of money over time. If you’re contributing a fixed dollar amount, that amount becomes less effective as years go by. Percentage contributions help counteract this by increasing along with your salary, which typically adjusts (at least partially) for inflation.
Automatic Increase
The Vista 401(k) also allows you to automatically increase your contribution percentage January 1st of each year. You decide how much you would like to increase your contribution each year and for how many years. Once this is set in motion it will automatically occur at the beginning of each year. This is an excellent way to keep pace with inflation.
The Bottom Line
Contributing to your 401(k) in percentage form ensures your savings grow with your income, keeps you aligned with retirement goals, and protects against inflation. It’s a simple but powerful strategy that promotes consistency and long-term financial health. By choosing percentages over fixed amounts, you set yourself on a smarter path to a secure and comfortable retirement.
Nuts & Bolts: How to Invest Your DROP Funds
How to Invest DROP Funds in Your Vista 401(k) Account:
- Let the Florida Retirement System (FRS) know you would like to roll your DROP funds into your Vista 401(k) Account.
- FRS will provide the necessary form. Please complete that form and return it to FRS.
- Should you choose to roll your funds into the Vista 401(k) Plan, the Vista 401(k) Retirement Services Department sends a rollover form to you to complete and return to Retirement Services.
Note: If you do not have a Vista 401(k) Account, you need only set one up prior to retirement and fund it with at least one payroll contribution.
Why Roll Drop Funds into Your Vista 401(k) Account:
- Consolidation: Individuals often accumulate multiple retirement accounts over their career. Consolidating these accounts makes it easier to track performance, adjust asset allocation, and plan for your financial future. Consolidation not only streamlines your financial strategy but also provides a clearer picture of your overall retirement readiness.
- Tax Advantages: DROP funds are treated as income the year they are paid out to participants. If you do not place these funds in a tax-deferred account, the funds will be treated as income in that year. However, if you roll them into a tax-deferred plan like the Vista 401(k) Plan, taxes will be taken as you withdraw funds over the years. By then you may be in a lower tax bracket.
- Portability: Your DROP funds are portable. This means that should you choose to roll these funds out of your Vista 401(k) account, you can do so with no waiting period or penalty.
Please call us at (866) 325-1278 if you have any questions. You may also visit Vista401k.com to make changes.
The DROP Box
Helpful Links
The material herein is provided for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. The material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations. Situations differ among individuals and you should not assume that these generalizations or information apply to you. Keep in mind that past performance is no guarantee of future performance, and investments involve the risk of loss of principal and earnings. Additionally, neither your employer nor the plan administrator nor FBMC is able to provide you with investment advice--if you would like specific investment advice, you should consult Cerity Partners or your own personal investment advisor.