How to use a properly drafted policy statement to simplify a qualified retirement plan [1]`s fund selection process.
A well-written investment policy statement can simplify the problem of selecting funds for participant-directed defined contribution plans. Both investment theory and fiduciary [2] regulations lead the plan sponsor to a fund selection approach that is driven primarily by asset class [3] characteristics, not by specific fund qualities. The article includes a table summarizing core, recommended and optional asset classes [4] that should be offered through most participant-directed plans. Once asset categories have been identified, the fund selection process may be streamlined significantly through the application of appropriate screening criteria.
Download Using Investment Policy to Choose Asset Classes and Investment Funds [5].
This article originally appeared in the May 1999 issue of Compensation and Benefits Manager`s Monthly.