The six approved Providers each offer a wide variety of investment products. UT System has categorized your options into tiers below. Not all providers offer investments in each tier. Specific investment product information can be found in the provider summary sheets.
- Tier 1: Asset allocation or lifecycle options
These funds are designed for investors who want a simple yet diversified approach to investing. They are professionally managed funds that automatically rebalance according to their investment objective. Lifecycle funds are rebalanced according to a target retirement date; asset allocation funds are rebalanced based on risk objectives.
- Tier 2: Core investment options
This tier includes a limited menu of investments that represent mutual funds primarily invested in the three major asset classes (stocks, bonds, and short-term investments). You may want to consider these options if you are comfortable diversifying your investments on your own or with the assistance of an investment or financial advisor and/or asset allocation tools.
- Tier 3: Expa nded Options
This tier includes a much larger menu of additional investment options for more sophisticated investors. You may want to consider this approach if you are very comfortable managing your own portfolio or have an investment or financial advisor managing your portfolio, and understand how to research, evaluate and monitor a wide variety of investments with different risk and return characteristics.
- Tier 4: Self-Directed Brokerage
This tier offers you access to thousands of additional mutual funds, and for the UTSaver DCP, individual securities. The broad spectrum of investments in this tier makes it a good choice for more sophisticated investors with an understanding of how to research and evaluate individual investments. There are some restrictions and additional fees for this type of account, and it is not offered through every Provider. Contact your Provider directly for more information.
- Annuity Options
Some Providers also offer fixed and/or variable annuity products. An annuity is a contract with an insurance company enabling you to accumulate contributions in a separate account under which you can select from a variety of investment options including mutual funds and guaranteed fixed interest accounts. An annuity also provides the option for you to receive a regular series of income payments for a specified period or for life in return for your contributions.
Asset Classes
Additionally, various asset classes are available within each of these tiers. The following chart illustrates the potential risk and return of the primary asset classes. As you move upward toward the highest level of the chart, the investment options within each asset class provide you with an increasing opportunity for higher returns. However, with greater return potential comes greater risk.
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