The 20 Rising Stars of Retirement Plan Advisory 2008

SPONSORED ARTICLE World Order The New With the world rebalancing, Ivy Funds advocates the same for qualified plan options In our view, flexibility and uncertainty are the hallmarks of a new global business and investing theme – something we call global rebalancing. Since the bursting of the dot-com bubble in 2000, we’ve seen a shift away from U.S.-dominated growth. More countries now are global players, especially emerging and developing countries. Despite recent higher global inflation, we believe this theme has many more years to run, though it will proceed at a different pace in each country and take a variety of forms. As such, it should be recognized as an evolution rather than a revolution. For example, our overseas trips last year brought to the fore direct ties between emerging markets such as China and Brazil, India and Indonesia and the Middle East and Russia. There are two implications to this: first, there’s less reliance on the U.S. as an export market and, second, there’s less reason for a country to tie its currency (and monetary policy) to the U.S. dollar, especially for sovereign wealth funds. Those developments represent a sea change in the global economy. As the world becomes less U.S. centric, the economic center of the world is changing. From the Middle East to India to China, we also see a more integrated, global approach to economic development than in the U.S. Regardless if they are private or partly stateowned, more foreign businesses recognize they’re part of a bigger picture. For a country’s power supply to increase, for instance, the power equipment provider must have the capital to increase capacity and production. To get that equipment to the utility, new high-capacity roads, ports and rails must be built. To finance that activity, the utility relies on financing authorities and infrastructure funds. When power grids are in place, it raises an economy’s growth potential. Along the way, all the activity provides more people with jobs and higher incomes. Our portfolio managers constantly keep this global dynamic in mind as they review holdings and asset allocation strategies. In an equity market where we have seen growth become ‘the new value,’ with sector-wide blow-ups in financials and relentless globalization across asset classes, we think flexible, outside-the-nine-box thinking as a core portfolio strategy offers multiple benefits: • It frees employees and their advisors to focus more on their long-term strategic goals, rather than spending time on tactical portfolio repositioning based on asset classes currently in or out of favor. • It is a more value-adding, real world approach than cookie-cutter solutions, such as target maturity, static allocation and life-cycle investment products. As plan sponsors, you know that the easy, least expensive choice for employees may not necessarily be the best one for your business in the long term. SEPTEMBER 2008 I N SELECTING ACTIVE EQUITY MANAGERS for a qualified plan, a question many plan sponsors ask is: How do a fund family’s large-cap products measure up against the Standard & Poor’s 500 Index? This analysis includes not just performance, but a careful look at risk and portfolio composition. Some investment advisors pride themselves on how little tracking error they have in terms of domestic equity sector weightings relative to a strict nine-box investment style. The message: A tightly-wound large-cap equity product is a choice you can make with confidence as the primary investment option to offer plan participants. Over the past decade, however, the proverbial cheese has moved overseas. A solely U.S.-focused equity strategy has provided mediocre results, at best. In fact, over the past two years, hanging one’s hat on the S&P 500 Index had the potential to leave plan participants overexposed to fallout from the subprime mortgage and credit crises and overweighted in a currency that has fallen rapidly in value – the U.S. dollar. Meanwhile, international and developing market stocks have outperformed for more than five years on a relative basis through the end of 2007 and other investment classes and factors, from commodities to geopolitical risk, have played increasingly important roles in generating competitive results for plan participants. We think some of the most important questions you can ask as a plan sponsor today are: • How well does a fund family’s management think outside the nine boxes in volatile equity market conditions, when styles and sectors may move rapidly in or out of favor? • How good a job do asset managers do in weighing the risks of one asset class against another to deliver absolute return? • How narrow or flexible are mutual fund prospectus mandates? Are a portfolio manager’s hands tied too tightly to preserve capital in a bear market? 20 RETIREMENT PLAN ADVISORY RISING STARS

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The 20 Rising Stars of Retirement Plan Advisory 2008 Contents Doing Well By Doing Good The Post-PPA Bounce Automatic Enrollment vs. Managed Account Unfair Advantage? You Bet The New World Order 20 Rising Stars of Retirement Plan Advisory Mentors’ Page

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