Northwestern University, Evanston, Ill. is streamlining the investment lineups of its defined contribution plans, said a transition guide posted on the university’s website.
The changes are expected to simplify participants’ decision-making, said a letter to plan participants on the university’s website. More than 200 funds were offered across the legacy lineups.
“Having an excessive number of investment fund options from which to choose can be overwhelming and result in inaction or less optimal investment decisions by participants in the plans,” said a university spokesman in an e-mail. “For these and other considerations, and after extensive review of the current fund offerings, it was determined that fewer investment fund options would help faculty and staff more easily make investment choices, and that we could reduce redundancy and offer funds with an eye toward lower fund expenses charged to employees in the plans.”
The plans will continue to be administered by TIAA-CREF and Fidelity Investments, although the number and style of investment options offered through each firm will change, effective Oct. 21.
Both TIAA and Fidelity will offer BlackRock’s LifePath Index target-date series, the same five Vanguard Group index funds, actively managed core funds (12 for Fidelity and 14 for TIAA), and a brokerage account option.
Most of the active core funds are new. Also new are the BlackRock target-date funds and the five Vanguard index funds — the Extended Market Index Fund, Institutional Index Fund, Short-term Bond Index Fund, Total Bond Market Index Fund, and Total International Stock Index Fund.
The eight active core options that will be available to all participants are Capital Group’s American Funds New World Fund, Goldman Sachs Asset Management’s Small-Cap Value Fund, John Hancock Investments’ Disciplined Value Fund, MFS Investment Management’s Midcap Value Fund, MassMutual Financial’s Select Midcap Growth Equity Fund II, Vanguard’s PRIMECAP Fund, Metropolitan West Asset Management’s Total Return Bond Fund, and Wells Fargo Asset Management’’s Small Company Growth fund.
Participants using Fidelity will have access to four additional active options — Fidelity’s Diversified International Fund, Parnassus Investments’ Parnassus Fund, Principal Real Estate Investors’ Real Estate Securities Fund, and MetLife’s Fixed Interest Account.
Those participants using TIAA will have access to six additional active options — Capital Group’s EuroPacific Growth Fund, CREF Money Market, CREF Social Choice, TIAA Real Estate Account, CREF Stock and TIAA Traditional. The annuity options are holdovers from the current TIAA lineup.
Nearly 200 funds, mostly managed by Fidelity, are being removed from Fidelity’s investment menu, and about 30 funds, all managed by TIAA, are being removed from TIAA’s lineup.
The plans — two 403b plans and one 457 plan — have $3.1 billion in assets combined, said the spokesman.
The new investments options will be monitored on a regular basis ensure their appropriateness in the plans, the spokesman said.
