The Financial Realities of Elder Care & Long-Term Care Insurance
Seeks to provide a diversified, medium volatility option that balances assets that traditionally have higher growth potential with others that typically are more stable.
The New Horizons Fund is MMBB’s most diversified investment option. It is unique in that it shares investments with MMBB’s large Annuity Fund.
The majority of the fund is invested in global equities and bonds. A portion of the New Horizons Fund is allocated to alternate investments including private equity, real assets, and private debt. These are long-term contractual commitments which are not traded on any public exchange but which are expected to produce highly favorable long-term results.
These various investments do not always rise and fall at the same time and to the same degree. By combining them in a single portfolio over an extended period of time, the investor is more likely to experience an acceptable rate of return with reasonable volatility. The net return of an investment in the New Horizons Fund equals the result of these markets’ performance, plus or minus the fund managers’ active performance, minus total expenses.
The New Horizons Fund employs a combination of both active and passive investment styles in both its equity and fixed income allocations.
The New Horizons Fund is intended to give the investor an even more diverse an exposure to the asset classes and investment styles than exist in the other MMBB investment portfolios.
The largest share of this fund is invested in equities (stocks of companies) of a wide variety of corporations around the globe. Historically, over long periods of time, equities have tended to provide higher returns than other investments, such as bonds or money market funds. While there is no guarantee that this will be the case in the future, investment theory suggests that exposure to equities for a portion of a diversified investment portfolio is a key reason investors would select an option like this one.
Because bonds (fixed income) usually have return patterns that are very often opposite to stocks, the bond component tends to have a stabilizing affect on the portfolio. This can be particularly valuable when the stock market declines.
Very importantly, New Horizons affords members an opportunity to participate in investments that are typically not available to individuals, except those who are extremely wealthy. These investments fall into two categories:
The New Horizons Fund mirrors the investments of the Annuity Fund, the asset pool from which annuity payments are made to retirees. Since the Annuity Fund has a very long time horizon, it can afford to tie up assets in alternative investments for many years. For members who want to place their assets in a very diversified investment option prior to retirement, the New Horizons Fund may be an opportunity to access higher returns than some other investment options without extremely high volatility.
All investments risk the loss of capital. Although the combination of a variety of asset classes creates a very well diversified fund that should cushion shocks in any one of those areas, the return of this fund could still be negative.
That portion of the New Horizons Fund that is allocated to stocks (equities) will be as subject to equity market forces as any of the MMBB equity-only investment options.
That portion of the New Horizons Fund that is allocated to bonds (fixed income) will be subject to risks of the bond market, primarily losses from rising interest rates. Investments proving uncreditworthy can also create losses.
Part of the equity and fixed income (stock and bond markets, respectively) exposure is gained through the use of hedge funds. Hedge funds are generally less regulated than other types of investment vehicles. They may leverage investment positions. This can magnify returns, both positive and negative. Although MMBB engages managers that they believe to be both prudent and reputable, it is possible for complex hedging strategies to go awry and harm those portions of the portfolio.
The success of all actively managed portions of the fund is highly dependent upon the skill of the manager appointed to them.
Due to the latitude extended to active managers, their portfolios may hold some securities (e.g., high yield bonds) that MMBB might not include as stand-alone policy allocations. As a result, more risky investments can be part of the fund’s portfolio.
Private investments and real assets carry special risks, many of them related to illiquidity:
Values for certain investments are not available on a daily basis and/or available only on a lagged basis. This has two implications for a person who is buying or selling units of the New Horizons Fund on any given day. If the non-daily valued investments have declined in value since they were last valued, a person purchasing units of the New Horizons Fund could be purchasing them at a higher price than if the actual value were known at the end of each business day. Conversely, if the non-daily valued investments have increased since they were last valued, a person selling units might redeem units at a lower price—and thus realize less profit— than if the actual value were known at the end of each business day.
If you are uncomfortable with the risks associated with the New Horizons Fund, you may want to consider another MMBB investment option.
The information contained herein is for general purpose only. The use of our information should be based on your due diligence and MMBB will not be liable for any success of failure that is directly or indirectly related to the use of the information contained herein. MMBB assumes no responsibility for errors or omissions in the content herein. The information contained herein does not constitute a complete description of our investment services and it does not constitute any tax, legal, financial, or investment advice. In no event shall, MMBB be liable for any special, direct, indirect, consequential, or incidental damages, or any damages whatsoever, whether in action of contract, negligence or tort, arising out of or in connection with the use of the information contained herein.
The performance of the New Horizons Fund for varying lengths of time is summarized below. The longer the time period, the more likely it encompasses varying economic and market conditions.
|Price||1 Day||YTD||1 Year||3 Year||5 Year||10 Year|
While it is valuable to view investment performance over long-term time horizons, looking at shorter time periods can give one insight as to how returns may fluctuate over shorter time periods. The table below displays calendar year returns.
Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; performance through the current date may be lower or higher than displayed above due to market fluctuations, manager performance or other reasons.
|Investment Management Fees||0.67%|
|MMBB Ministry Support||0.50%|
|TOTAL ESTIMATED ANNUAL EXPENSES||1.24%|
With all MMBB fund offerings, there are no sales charges on purchases, deferred sales charges, short-term or other redemption fees, distribution or 12b-1 fees, dealer commissions or low-balance account service fees.
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