STRS Ohio’s Fiscal 2022 Investment Plan Calls for Returns Near Expected Policy Return of 6.84% in the Year Ahead
STRS Ohio Investment staff presented its Investment Plan for the 2022 fiscal year at the June Retirement Board meeting. The plan details staff’s investment strategy for each asset class in the system’s total fund. Fiscal year 2022 began on July 1 and runs through June 30, 2022. The fiscal 2022 Investment Plan projects a combined overall return among all asset classes to be near STRS Ohio’s expected policy return of 6.84% (assuming the total fund’s current allocation). The plan forecast calls for a growing U.S. economy and for inflation to remain within a tolerable range during the fiscal year.
The Retirement Board’s investment consultants, Callan LLC and Cliffwater LLC, reviewed and expressed support for the Investment Plan. The plan is available here. STRS Ohio’s plan and forecast is designed for a large institutional investor and may not be appropriate to an individual investor’s portfolio allocation, time horizon or risk tolerance. Like all economic forecasts, it should not be relied upon as an indicator of future results. For more personalized assistance, you can reach a Nationwide Retirement Solutions (NRS) Retirement Specialist toll-free at 866‑332‑3342.
Review Your Asset Allocation Following Strong Equity Market Returns
Domestic and international equity returns have been exceptionally strong for over a year now. If you have a portion of your assets allocated to equities, you have likely seen growth in that portion of your portfolio. This strong performance can result in an unplanned overweight to equities. This may be a good time to double-check your asset allocation to be sure it reflects your investment goals and risk tolerance.
When you established your defined contribution account, you may have used the questionnaire in our Investment Options Guide to help identify your investment style and asset allocation strategy. The questionnaire was developed by Wilshire Associates — a nationally recognized investment management firm, and based on your answers, you may have identified your investment style as conservative, moderate or aggressive.
Wilshire provides five potential sample portfolios that spread holdings across general asset classes. This can serve as a guide as you pursue your own allocation strategy. Since asset values change over time, it may be worth a review of your portfolio again. You can access the questionnaire here.
For more information about asset allocation, you can reach the retirement specialists at Nationwide Retirement Solutions (NRS) toll-free at 866‑332‑3342. NRS representatives are available Monday–Friday from 8 a.m. until 6 p.m.
STRS Target Choice
Many experts agree that as your retirement date draws near, a gradual move to lessen the risk in your portfolio makes sense. STRS Ohio offers eight Target Choice allocation options that do just that. These options are blended portfolios with a mix of fixed income, domestic and international equities and real estate. Each of these options targets a date in the future that would roughly match a participant’s expected retirement date. As the target date approaches, the investment mix becomes more conservative, shifting to a greater exposure to fixed-income securities and a reduced exposure to equities in an effort to reduce volatility. You can learn more about these Target Choice options here, and you can discuss your investment strategy with a retirement specialist at Nationwide Retirement Solutions by calling toll-free 866‑332‑3342.
Investment Choice Profile
This quarter’s SmartTALK profiles the STRS Russell 1000 Index Choice.
The STRS Russell 1000 Index Choice is an allocation choice that is intended to closely match the return of the Russell 1000® Index before fees. The Russell 1000® Index is comprised of approximately 1,000 U.S.-based companies selected for their large market capitalization, liquidity and industry classifications.
Companies in the Information Technology, Consumer Discretionary, Health Care, Financials and Industrials sectors make up about 75% of the Index. Top holdings include Apple Inc., Microsoft Corp., Amazon.com Inc., Facebook Inc. and Alphabet Inc. Intermediate and long-term performance figures for this and all allocation choices are provided on the Investment Performance Report.
What are benchmarks?
A benchmark is a standard — usually an unmanaged index — used for comparative purposes in assessing an allocation choice’s performance. Major U.S. stock indexes include the Russell 1000® Index and the Standard & Poor’s (S&P) 500 Index. Investors cannot invest directly in an index. STRS Ohio uses several “index choice” allocation options that are designed to closely match the return (before fees) of a particular market index (e.g., STRS Russell 1000 Index Choice or STRS MSCI World ex USA Index Choice). STRS Ohio lists a benchmark along with each allocation choice on the quarterly Investment Performance Report for comparative purposes.