Q2 2021 Plan Performance
By Constantine Mulligan, Director of Investments, Cerity Partners LLC
Vista 401(k) Plan Fund Performance
Over the long-term (10 years), all investments in the plan have performed in line with expectations. The majority of the funds in the plan have provided returns that fall in the top half of their respective peer groups, and none of the funds’ returns have fallen into the bottom quartile of their respective peer groups.
In the short-term (1 year) several of the funds with a “growth bias” (i.e., funds that invest in companies that are forecasted to grow quickly) underperformed their respective peers. This is partially attributable to rising interest rates, which can have an adverse effect on higher growth-oriented equities.
We continue to monitor the short-term performance of these funds, and we maintain confidence in the long-term prospects of all funds in the plan.
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.
Q2 2021 Economic and Market Recap
High vaccination rates, broad economic reopenings, and the subsequent release of pent-up demand led to economic growth in the quarter that will be close to 10% when ultimately reported at the end of July. Historic fiscal and monetary stimulus combined to offset any negative impact of supply chain and labor shortages. Businesses, who became even more confident of ongoing economic expansion, increased spending on capital projects, particularly the spend on productivity enhancing technology investments. Consumer spending was boosted by strong jobs gains, increased wages in many industries, and very high savings rates coming into the quarter.
Overseas economies have largely experienced a slower, more delayed recovery as relatively low vaccination rates allowed the second and third COVID-19 waves to spread more widely and lethally. Renewed shutdowns and delayed reopenings caused double dip recessions in Europe, Japan, and Latin America with growth turning positive in these regions only near the end of the quarter. China was an exception as their recovery preceded that of the other developed market economies with the country now clearly in expansion moving into the second half of the year.
Financial markets produced strong returns around most of the globe. Continued loose monetary policy and another round of fiscal stimulus together helped drive equity prices higher in the U.S. The shift down and flattening of the treasury yield curve produced positive performance in the investment grade fixed income market.
The threat of excessive monetary and fiscal stimulus ultimately unleashing an inflationary cycle has climbed to the top of the list of market risks now that the severity of the pandemic appears to be largely under control. A pickup in the April and May inflation indicators was expected as 2021 prices are compared to those at the depths of last year’s recession. But the magnitude of price increases exceeded expectations as powerful reopening demand was met by the remnants of pandemic induced supply constraints in both product manufacturing and labor.
Labor shortages are another inflation pain point as potential employers are increasingly citing their biggest limitation being the inability to attract qualified job applicants. Mitigating factors such as the end of enhanced unemployment benefits, fewer childcare issues as children return to the classroom, and dissipating virus concerns could relieve some of the pressure. There may, however, be more permanent labor supply issues due to limited immigration, earlier baby boomer retirements, and labor skills mismatches. Any sustained wage pressure caused by these shortages could manifest itself in higher inflation and/or lower profit margins unless employee productivity increases as well.
The market, and more importantly the Federal Reserve, so far views the recent increase in the inflation rate as transitory, or a temporary phenomenon that should not necessarily lead to a more immediate tightening of monetary policy. Messaging coming from the Fed governors has been somewhat mixed and is leading to concern over another taper tantrum as the bond market reacts negatively to the first signs of monetary tightening.
The Fed and other global central banks appear to be heeding lessons learned over the last 20 years that inherent disinflationary forces in the global economy should change the approach to monetary policymaking (which had previously dominated since the last inflationary cycle in the 1970s). Central banks appear to be taking a more reactive than proactive approach to burgeoning inflation rates as they are more confident in their ability to eradicate systemic inflation as opposed to their effectiveness in a more nefarious deflationary environment. This monetary policy approach has allowed more inflation in asset prices as opposed to the prices of most goods and services.
What this Means for Investors
Strong economic growth and accommodative central banks create a favorable environment for risk assets (i.e., equities) relative to less risky assets (i.e., bonds). However, despite the low interest rate environment, bonds continue to provide a ballast to a portfolio, and as always a diversified portfolio designed to meet one’s specific time horizon and risk profile (i.e., a target date or balanced fund) continues to be an all-weather solution.
June 2021 Fund Performance Chart
“Nuts and Bolts”: Consolidate Retirement Plans
By Jim Matheu, Retirement Services Manager
If you have worked for one organization your entire career this does not apply. However, if you are like the majority of people and have worked for several different organizations, you have likely accumulated several retirement plans along the way. To properly monitor these plans and make certain each plan meets your objectives, you may want to consider consolidating all retirement assets into your Vista 401(k) Plan.
This can be accomplished by visiting our website at vista401k.com. Once there, simply select “401(k) Plan” and choose “Forms”. Here you will find the “Vista 401(k) Rollover Request Form.” Complete this form and follow the directions for submission.
As noted on the Rollover Request Form referenced above, the following qualified plans can be rolled into your Vista 401(k) Plan:
- 401(k)
- 401(a)
- 403(b)
- Traditional IRAs
- 457
- Pension Plans
If you do not have a Vista 401(k) account, you will first need to complete a Vista 401(k) enrollment form or enroll online at www.vista401k.com.
If you have any questions, please contact the Retirement Services Department at (866) 325-1278 or via email at 401k@vista401k.com.
This Way to Retirement
By Jim Matheu, Retirement Services Manager
SIGN UP TODAY
In our years of helping people plan for retirement, we have never met an investor who lamented the fact that they started funding their retirement plan too early. Too often, the opposite scenario presents itself and our clients are forced to either work longer than they wish or reduce their standard of living. Fear not, it is never too late to start saving for retirement, and the Vista 401(k) Plan is here to help.
OPENING AN ACCOUNT
Opening a Vista 401(k) account is a simple process: Go to Vista401k.com and open an account online. Another option is to visit the website, select 401(k) Plan, then Forms, and download the Vista 401(k) Enrollment Form. Fax the completed form to (850) 425-8345 or mail it to: FBMC Benefits Management, P.O. Box 1878 Tallahassee, Florida 32302-1878
If you have any questions or prefer the personal touch, contact our Retirement Services Department at (866) 325-1278 and someone will walk you through the process.
CHOOSING YOUR CONTRIBUTION AND INVESTMENTS
The Vista 401(k) offers you the flexibility to determine how much you wish to contribute to your Plan per paycheck, and you have the flexibility to increase or decrease your contribution throughout the year.
Once you have determined how much you wish to contribute, it is time to choose your investment(s). The Vista 401(k) Plan offers 28 mutual funds for you to choose. The investments offer you the flexibility to move from fund to fund throughout the year as well. These funds are from well-known fund families and offer options that appeal to conservative investors, aggressive investors, and everyone in between.
The Vista 401(k) Plan also offers a series of Target Date Funds which are designed to be appropriate for an average investor who is similar to you in age. The Target Date Funds utilize what is called a “glide path,” which automatically adjusts your account to become more conservative as you approach retirement age.
If you need assistance selecting funds, please call our Retirement Services Department at (866) 325-1278 to set up a one-on-one meeting with a registered investment advisor at Cerity Partners, LLP, a Registered Investment Advisory Firm. This financial coach will help you understand your Vista 401(k) investment options, answer your questions, and help you to make sound decisions about your retirement account. This service is provided at no additional charge to the participant.
REMAIN STEADY
Like many things in life, consistency is important in creating a successful retirement plan. That is, do not stop contributing to the plan and avoid making premature withdrawals of funds. If you receive a raise, consider increasing your contribution to your Vista 401(k) account. If the market performs poorly, your steady investment every pay period will allow you to purchase more shares of your selected funds at a discounted price. When the market recovers, you will reap the reward of having purchased those funds at a lesser value.
Note: Each contribution is made on a pretax basis. This serves to reduce your taxable income, which results in a lower tax burden.
MONITOR YOUR INVESTMENTS
It is important that your portfolio reflect your risk tolerance. Each participant approaches risk differently. For most investors, the younger you are, the more aggressive you may want to invest because you have time on your side. Historically, the market has outperformed more conservative investments over long periods of time. As you accumulate more assets in your plan and are approaching retirement, most investors become more conservative as they have less time to make up for short term market corrections. Additionally, they have larger nest eggs which are more affected by day-to-day market volatility. Unfortunately, too often participants invest aggressively and fail to revisit their portfolio over the years. That is why you must periodically revisit your investment choices and ensure they accurately reflect your risk tolerance.
As discussed earlier, you may want to consider investing in a Target Date which will tailor your risk to that of an average investor based on your age and make adjustments over time to manage your risk.
Invest today. Select and monitor your investment choices over the years. Remain steady and do not stop investing or withdraw from your Vista 401(k) account until retirement. If you follow this straightforward approach to investing, come retirement you will reap the rewards of your diligence!
Remember, Vista 401(k) is focused, flexible and here for you. Please feel free to contact our Retirement Services Department at (866) 325-1278 for any help.
Retirement Shortfall Recovery
By Toni Milton, Sr. Retirement Plan Specialist
Retirement Concerns
It is a challenging time to contemplate retirement. Many of us have been fortunate enough to not have to touch our retirement funds during the pandemic and were rewarded by a roaring stock market. However, others were not in the same position. Perhaps you experienced a decrease in hours or were placed on leave. It may be that your career was not impacted in any way, but your spouse lost their job. Over the course of the pandemic, many families had to deal with a variety of unexpected expenses, causing some families to withdraw money from their 401(k) account, reduce the amount they were saving, or stop contributing altogether. The pandemic caused a financial strain on many families who are still dealing with those ramifications.
Getting Back On Track
Steady, uninterrupted contributions to your retirement account is an essential part of planning for retirement. However, sometimes life gets in the way of our plans. During this pandemic, you may have been forced to withdraw money from your account. It may have been necessary to meet basic needs. However, as we move toward recovery, getting back on financial track is essential to reaching your financial goals.
Maximize Your Contributions
Increasing contributions to your 401(k) account is an excellent way to make up for the short fall the pandemic may has caused. The Vista 401(k) Plan allows you to contribute a maximum amount of $19,500 for any participants under the age of 50 and $26,000 for participants age 50 and older. Steady increases in retirement savings will greatly benefit our retirement plans, and the Vista 401(k) offers you the flexibility to make changes throughout the year.
Analyze your spending and determine whether additional funds can be contributed to your retirement account. For example, you may purchase gourmet coffee daily, or perhaps you go out to lunch and dinner every day. To recoup lost funds during the pandemic, you may consider fewer trips to Starbucks or eating at home more often. Redirecting the savings to your 401(k) account is the perfect way to make up for that shortfall and enhance your retirement future.
Tailor Your Investments to Meet Your Needs
Increasing your 401(k) contribution is beneficial, but you should ensure your investment strategy meets your current retirement needs. We have partnered with Cerity Partners, an independent Registered Investment Advisory firm, to provide you 1-on-1 investment advice. They will analyze your retirement portfolio and make investment recommendations based on your unique set of circumstances. Your increased contributions with an appropriately designed investment strategy should expedite your financial recovery and put you in a better position to retire when that time comes. Remember, Vista 401(k) is focused, flexible and here for you. Please feel free contact our Retirement Services Department at (866) 325-1278 for any help.
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 your own personal investment advisor.