We hope you are enjoying your summer. There are few places in the world better than Chicago in the summer time! And since you are most likely busy with fun things like barbecues in the back yard and summer vacations, we will save you some time this quarter and get right down to business with our recommendations…
Summary, Last Qtr: Performance in the market in the 2nd quarter was not nearly as good as it was in the 1st quarter. Fortunately, we had continued to recommend that you maintain an overweight to the fixed income funds in your 401(k) plan. Volatility levels during Q2 were as much as 72% higher than it was at the end of Q1, largely due to the continued uncertainty in Europe. There was some economic data in the U.S. such as employment that was not as positive as expected and caused some of the volatility, but it was primarily due to Europe.
New Recommendations: For the Growth allocation this quarter, you may want to consider a slight increase in exposure to the foreign markets because valuations are down as a result of the uncertainty. We see this as a good buying opportunity. However, if you are someone who follows either the Conservative or Moderate allocations, we believe that you consider maintaining a slight overweight to your Interest Income or Stable Value funds and wait to increase your international investment exposure for now. Why aren’t we making the same recommendation for all three allocations? Because even though we believe there are good buying opportunities in the international markets, there is still a strong likelihood that volatility will remain high overseas…and that is something we want to avoid in the Conservative and Moderate allocations.
Our Investment Committee will continue to monitor the global markets, and we will provide our recommendations at the beginning of each quarter. As you get closer and closer to retirement, it is as important as ever to make the effort to protect what you have worked so hard to save! And to help you do that, we will continue to pass along our insights and the Quarterly Allocations any time we make changes in the future.
Enjoy the great Chicago summer, and we will share our next recommendations with you at the start of football season this fall!
-The Retirement Network team
 Based on the historical pricing data of Volatility of S&P 500 (^VIX). Price at close on March 30, 2012 was 15.50; highest price during the 2nd quarter of 2012 was 26.66 on June 1.