C-FSC Steering Committee Members

Full-Time Continuing Contract Faculty Senators Council

411 Lafayette Street, Room 327 New York, NY 10012 P: 212 998 2230 c-fsc@nyu.edu

Date:

March 8, 2018

Memo to:

Margaret Meagher, Co-Chair University Retirement Committee Patricia Halley, Co-Chair University Retirement Committee

From:

Mary Killilea Chairperson, C-Faculty Senators Council A/Y 2017-2018

Subject:

C-Faculty Senators Council Resolution regarding the Vanguard Total International Bond Index Fund

The C-Faculty Senators Council submits the attached resolution regarding the Vanguard Total International Bond Index Fund, passed at the March 8, 2018 Council meeting.

cc:

Katherine Fleming, Provost

Carol Morrow, Vice Provost

Ellen Schall, Senior Presidential Fellow

Cybele Raver, Vice Provost for Academic and Research Affairs

C-FSC Steering Committee Members: Susan Stehlik, C-FSC Vice Chairperson Lauren Davis John J. Gershman Leila Jahangiri Larry Slater Beverly Watkins

Vincent Renzi, C-FSC Faculty Benefits & Housing Committee Chair Magued Iskander, T-FSC Faculty Benefits & Housing Committee Co-Chair Angela Kamer, T-FSC Faculty Benefits & Housing Committee Co-Chair Stevin Azo Michels, AMC Benefits Committee Chair

Wen Ling, T-FSC Chairperson Michael McCaw, AMC Chairperson

C-FSC Resolution regarding Vanguard Total International Bond Index Fund Approved 3/8/18

At the March 8, 2018 meeting of the C-Faculty Senators Council, the Council passed the following report and resolution:

Report

The Vanguard Total International Bond Index Fund began May 31, 2013. Retail investor shares in the fund (VTIBX) have a current expense ratio of 0.13%.1 Money magazine has named it one of the Money 50 Best Mutual Funds Now2 It is one of the core funds for Vanguard's family of Target Retirement Funds, which are recommended as the default investment options for Vanguard-electing participants in the NYU Retirement Plan.3

No other approved Vanguard bond fund provides international diversification. Among investment options available from TIAA, only the variable annuity CREF Bond Market Account (QCBMIX) has substantial international exposure.4 This fund's expense ratio is 0.29%; its investment strategy aims at a favorable long-term rate of return, not diversification; and it seeks to have not more than 20% of holdings in assets other than U.S. Treasury Inflation-Indexed Securities. (As of December 31, 2017, the fund's current international holdings are 14.4%.) Given its investment strategy, this fund is of little use to retirement plan participants seeking to adjust the international fixed-income asset allocation of their portfolios.

It is clear from its role in the Target Retirement Funds that the Vanguard Total International Bond Index Fund is a high-quality, low-expense investment option for international asset diversification. That it is not also available for direct investment by plan participants seems to be an oversight due to its recent inception date. Particularly with the lack of a similar investment option from TIAA, the committee therefore recommends that this fund should be made available to retirement plan participants as a direct investment option, and moves for the adoption of the following resolution.

Resolution

WHEREAS the Council has accepted the report of its Committee on Faculty Benefits and Housing in this matter, it is

RESOLVED that the Council requests the University approve the Vanguard Total International Bond Index Fund as an investment option for participants in the NYU Retirement Plan.

1. For admiral shares--VTABX--the ratio is 0.11%. 2. 3. Twelve such target funds are currently available to plan participants. Their international bond allocation in this index fund varies from 15.7% (for the in-retirement plan) to 3% (in the 2065 target-retirement plan). 4. The other available fixed-income option from TIAA, the CREF Inflation-Linked Bond Account, has only 0.1% in international assets.

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