Investment Options and Plan Performance

Participants in the University's Faculty Retirement Plan invest their contributions through Securian Retirement Services. Securian offers Vanguard and Fidelity investment products, as well as a broad range of investment options so you can build a diverse portfolio of investments.

There are five general categories in which you may invest your Faculty Retirement Plan money:

These categories vary in both risk and possible investment return. Carefully read the appropriate prospectus or custodial agreement before investing in any fund or account. If you have questions on any of the investment options outlined below, contact Securian Retirement Services at 651-665-3670 or 800-421-3334. For other retirement benefit questions, contact the Employee Benefits Service Center at benefits@umn.edu, 612-624-8647 or 800-756-2363.

Please note: This material is intended for informational purposes only, and no warranty is given regarding the information. None of the information is intended to constitute, nor does it constitute, financial advice. This information is not a substitute for professional financial advice, and each person should always consult his/her own financial or other professional advisers and discuss the facts and circumstances that apply to them. So far as it is permitted by law, the University of Minnesota disclaims liability for any loss, however caused, arising directly or indirectly from the use and content of this information.

Insurance Company General Accounts

The general accounts are backed by the financial strength and claims-paying ability of the insurance company that offers the accounts. The company promises to pay interest on the principal at a rate stated by the company from time to time that will not decrease below a stated minimum. Some restrict the ability to transfer or withdraw funds. General accounts are sometimes said to be "guaranteed"; this refers to the assurance of the company that it will protect the principal and pay interest at the stated rate, based solely on its financial strength and claims-paying ability, rather than on any backup support by any third party.

  • Minnesota Life General Account. The principal and a minimum return (3%) are guaranteed by Minnesota Life, a highly-rated insurance company. Declared interest rates will vary over time with market conditions. There are no restrictions on transfers to other investment options within the plan or on withdrawals.
  • Minnesota Life General Account Limited. This is similar to the general account, but transfers or withdrawals are generally limited to 20% of balance annually. The account has options for larger transfers or withdrawals at retirement or termination and at five-year intervals thereafter. The general account limited typically credits interest slightly above the general account's rate.

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Money Market

Money market funds invest in short-term debt securities with the objective of maintaining a stable share price. The investment return is the interest, and it fluctuates with short-term market interest rates.

  • Vanguard Prime Money Market Fund. The fund invests in short-term corporate and bank obligations maturing in 90 days or less.

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Bond Funds

Bond funds invest in bonds and other debt securities with varying maturities consistent with the funds' investment policies and objectives. The return consists of both interest income and the change in the market value of bonds (which fluctuates inversely with market interest rates).

  • Fidelity Strategic Income Fund. Invests in a broad range of debt, both in the U.S. and abroad. This fund targets a mix of 40% high-yield bonds, 30% U.S. government and high-quality corporate bonds, 15% emerging market debt, and 15% foreign developed market securities.
  • Templeton Global Bond Fund. This fund is actively managed and invests at least 80% of its assets in bonds of governments and government agencies located anywhere in the world.
  • Vanguard GNMA Fund. This fund seeks to maintain a high-income stream by investing in a broad range of Government National Mortgage Association (GNMA or 'Ginnie Mae') securities. These securities are backed by mortgages and are subject to prepayment risk, unlike other bonds with the full-faith backing of the U.S. government.
  • Vanguard Inflation-Protected Securities Fund. This fund is an actively managed, intermediate-term bond fund that invests primarily in Treasury inflation-protected securities. This fund seeks inflation protection and income, yet is typically less volatile than nominal U.S. Treasury bonds.
  • Vanguard Intermediate-Term Investment Grade Fund. This fund is an actively managed, intermediate-term bond fund that seeks moderate and sustainable current income. This fund has a minimum 95% investment in securities rated Baa or higher.
  • Vanguard Long-Term Investment-Grade Fund. This fund invests primarily in long-term, high-quality corporate bonds. It may include up to 5% in lower-quality bonds and 20% in U.S. government or agency issues.

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Hybrid Funds

Hybrid funds, which include asset allocation and balanced funds, are blended funds that invest in both stocks and debt securities with wide latitude to vary the proportions. Share price and return will vary due to fluctuations in the markets and the fund manager's skill in allocating assets among the markets.

  • Fidelity Asset Manager: Growth. An actively managed fund that aggressively seeks maximum long-run total return by the allocation of assets among stocks, bonds, and short-term instruments of U.S. and foreign issuers. Neutral mix is 70% stocks, 25% bonds, and 5% short-term instruments; permissible range is 50% to 100% for stocks, 0% to 50% bonds, and 0% to 50% short-term and money market categories.
  • PAX World Balanced Institutional Class Fund (PAX World Fund). With a mix of both stocks and bonds, the PAX World Balanced Fund invests in socially responsible companies to seek income, conservation of principal, and long-term growth of capital.
  • Vanguard Target Retirement Funds. These funds gradually and automatically shift to more conservative investments over time as the investor's expected retirement date nears. The funds seek to provide capital appreciation and current income by investing in a mix of Vanguard mutual funds. Each fund is targeted to investors planning to retire two years before or after the date listed in the fund name of time.
    • Vanguard Target Income Fund
    • Vanguard Target Retirement 2010 Fund 
    • Vanguard Target Retirement 2015 Fund 
    • Vanguard Target Retirement 2020 Fund 
    • Vanguard Target Retirement 2025 Fund 
    • Vanguard Target Retirement 2030 Fund 
    • Vanguard Target Retirement 2035 Fund 
    • Vanguard Target Retirement 2040 Fund 
    • Vanguard Target Retirement 2045 Fund 
    • Vanguard Target Retirement 2050 Fund 
    • Vanguard Target Retirement 2055 Fund 
    • Vanguard Target Retirement 2060 Fund 
  • Vanguard Wellington Fund. The fund is diversified among bonds held for relative stability of income and principal and stocks held for potential growth of capital and income. It normally invests 60% to 70% in stocks and 30% to 40% in bonds.

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Stock Funds

Stock funds invest primarily in common stocks with varying investment objectives. Stock funds may contain a variety of equity instruments including growth stock, value stock, and international stock. Share price and return may fluctuate to a greater degree than the overall stock market.

  • Fidelity Contrafund. A fund that invests primarily in the stock of companies believed to be undervalued in relation to other companies in the same industry. Investments may include growth stocks and value stocks.
  • Fidelity OTC Portfolio. An actively managed fund that invests primarily in securities traded on the over-the-counter securities market, including common and preferred stocks, securities convertible into common stocks, and debt securities.
  • Vanguard Emerging Markets Stock Index Fund. An indexed fund that invests substantially all of its assets in a representative sample of the common stocks included in the MSCI Emerging Markets Index. This index includes approximately 781 common stocks located in emerging markets around the world.
  • Vanguard Extended Market Index Fund. An indexed fund that invests in small U.S. stocks. The fund attempts to match the performance of the Wilshire 4500 Completion Index, an unmanaged index made up mostly of mid- and small-capitalization companies, by investing in a large sampling of stocks that match certain characteristics of the index.
  • Vanguard Global Equity Fund. An actively managed, globally diversified fund with low individual stock holdings. It seeks long-term capital appreciation by investing in both domestic and international stocks, spanning both growth and value stocks of large-, mid-, and small-capitalization companies.
  • Vanguard Growth Index Fund. An indexed equity fund that seeks to track the performance of the MSCI U.S. Prime Market Growth Index. This fund invests in large-capitalization growth stocks.
  • Vanguard Institutional Index Fund. An indexed fund that invests in all stocks included in the Standard & Poor's 500 Index in approximately the same proportion as in the Index. The S&P 500 represents approximately 75% of the total market value of all U.S. stocks.
  • Vanguard International Explorer Fund. An actively managed fund that invests primarily in the equity securities of small-capitalization companies, located outside the U.S., and selected on the basis of potential for capital appreciation.
  • Vanguard International Value Fund. An actively managed fund that invests in a broadly diversified portfolio of non-U.S. stocks selected on the basis of relative value. Computer analysis is used to determine country weightings and the relative value of market sectors. Individual stocks are evaluated for value based on fundamental business and financial factors.
  • Vanguard Mid-Cap Index Fund. An indexed fund that invests in all stocks included in the Morgan Stanley Capital International U.S. Mid Cap 450 Index. The 450 stocks included in the fund represent approximately 13% of the total market value of all U.S. stocks.
  • Vanguard PRIMECAP Fund. An actively managed, multi-cap growth equity fund that emphasizes large- and mid-cap stocks. This fund seeks long-term capital appreciation by investing in out-of-favor growth companies believed to be undervalued. This fund assesses a 1% fee on the sales of shares held less than one year.
  • Vanguard Small-Cap Index Fund. An indexed fund that invests in the stocks included in the Morgan Stanley Capital International U.S. Small Cap 1750 Index. The 1,750 stocks included in the fund represent approximately 11% of the total market value of all U.S. stocks.
  • Vanguard Total International Stock Index Fund. An indexed fund that invests in three Vanguard international stock index funds: a European fund, a Pacific fund, and an emerging markets fund. The combination of the three underlying index funds, in turn, seeks to match the investment results of the Morgan Stanley Capital International Total International Index.
  • Vanguard Total Stock Market Index Fund. A blended large-cap equity index fund that seeks to track the performance of the MCSI® US Broad Market Index. This fund invests in large-, mid-, and small-cap stocks, diversified across both growth and value styles.
  • Vanguard Windsor II Fund. An actively managed fund that pursues long-term growth of capital and income by selecting stocks believed to be undervalued. The fund emphasizes income-producing stock of larger companies.

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