Institutional Investors Managing Investment Portfolios. Tieu JD Ngao

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      • Securities business. Understanding between corporate securities financing should be limited to ensure that the assets of participants is sufficiently diversification.

      Even for DC plan led by members, donors still have to have a plan drafted investment policy. Investment policy document in which donor perspective plan satisfies the responsibility of the guardian to make a complete process for the selection of investment options provided to participants as well as for the periodic evaluation of these options; moreover, established a policy of investment may be required by law. DC plans, however, the investment policy is quite different than the DB plan. A DC investment policy making process to ensure that the wealth of the objectives and constraints of individual investors yet clear. Here is an example of a DC investment policy.

      2.2.1. Models and limited purposes in the course of the creation of DC plan sponsors do not set goals and limitations; participants themselves out own risk and profit targets as well as the term processing. Donors to provide resources and training, but participants are responsible for the selection of a target risk and profit to light own financial situation, objectives and risk attitude.

      As noted above, participants in DC plans bear the investment risk would result. Therefore, an investment policy for DC plans to meet a very different role than a DB plan's investment policy. For example, an investment policy for DC plans is conducted by members of monitoring document which describes the investment strategy and the alternatives available to group members which have the conflicting objectives and constraints. A policy such investment is necessary to become a general text on the principles rather than a monitoring investment policy for a specific member. Example 3-10 provides an excerpt of an investment policy for a DC plan directed by its members.

      Purpose: The purpose of this investment policy is to support the members of the Retirement Policy Committee (RPC) to set up, monitor, evaluate and modify an effective investment program is made to the defined contribution plan (the Plan) funded by DMSR company (BMSR). Powers to set out the responsibilities of this is due to the action of the board BMSR meeting on 26/03/2002. The purpose of this investment policy are as follows:

      • a clear distinction between the responsibilities of the RPC, plan members, fund managers and guardians of Planning / data holder selected by RPC

      • Provide a description of the alternative investment options available to plan members.

      • Provide for joint standards for monitoring and evaluating the performance of the investment managers and the means (funds) investment in relation to the appropriate investment mold.

      • Provide criteria for the selection, termination or change management / fund.

      • Establish effective communication processes for fund managers, guardians, RPC and members of the plan participants.

      The role and responsibilities of the RPC: RPC responsibility in the implementation of the investment policy, including:

      • Monitor the fund's objectives and selection of certain funds to propose to provide plan members more likely to diversify.

      • Monitoring the effectiveness of investment, including the cost of the proposed fund and plan members to terminate or change the investment fund as it feels right and appropriate.

      • Ensure smooth communication, and appropriate training resources for plan members

      • Select, monitor and, if necessary, propose changes in the Plan's guardian.

      • Make sure that the interest rate of the debt plan in accordance with the provisions of the Plan.

      Roles and responsibilities of participants: Responsibilities of the members of the plan include pumping the allocation of contributions and the accumulation of Planning in various funds and is responsible for training yourself to perform reasonable allocation of assets in the period in office or life.

      Active asset allocation of a member is a function of many variables, including age, income, time before retirement, risk tolerance, cumulative target, target replacement pension income and other assets. To allow participants to create savings and investment strategies consistent with individual needs, plan offers many investment options with multiple profit targets and different risk characteristics.

      The most appropriate location and plan members make individual decisions about how to allocate assets between investment options. Therefore, the orientation of the investment account to delay selection of employees and contributions by BMSR will be the responsibility of each member. Responsibility of each member is allocated assets in personal funds as the situation changes.

      To support the above mentioned factors, BMSR will provide information to participants regarding the investment options and the basic principles of investing. However, the distribution of materials and the provision of alternative investments by BMSR not mean that the advice to participants.

      Profit and risk are two fundamental concepts of investment activities. Over time, the alternative investments offer higher expected returns would indicate a greater level of risk (for example, the transformation of the profit or the initial value of the property). Plans to offer a variety of investment options other password in order to give participants the opportunity to to strategic choices profit / risk consistent with savings, their investment objectives and to perform multi- full diversification.

      Application of ERISA 404 (c): BMSR intend to apply the provisions of Section 404 (c) of ERISA, by (in different ways), making a huge investment choice and diversity; allowed to transfer funds between investment options at least once in 90 days; while providing sufficient investment information to participants on a regular basis.

      Selection of alternative investments: The role of the RPC is to provide participants a wide range of investment options with various investment objectives to make its members can invest based on their different investment needs. Investment choices made should indicate the type of property to the characteristics of different risks and benefits and the value of diversification. The following assets have characteristics desired investment is now:

      • The money market instruments.

      • Financial Instruments medium-term fixed-income

      • Treasury Securities adjusted to a medium-term inflation

      • Shares

      Large cap growth stocks

      Large cap stocks mixed

      Large-cap stocks

      Mid cap stocks mixed

      Small cap stocks mixed

      International stocks

      • mutual fund life cycle (the funds were set up have diversified at retirement) The selection criteria and the replacement of the fund include:

      • A wide range of investment options should be selected with the goal of allowing participants to diversify their investments and risks of the investment is consistent with the risk tolerance of the investment.

      • The fund must have reasonable fees, including consulting fees, 12 (b) -1 and other charges.

      • Each fund must have an investment strategy is set and clear explanation and must have evidence of this strategy being pursued over time.

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