United States

Retirement plan target date fund selection process: What to consider

WHITE PAPER  | 

Download Whitepaper

The popularity of target date funds (TDFs) continues to grow and is evidenced by strong flows from investors, lifting assets in TDFs to more than $1.7 trillion at year-end 2018.1 Contributing to the growth is the fact that TDFs often serve as the default investment option in many defined contribution retirement plans. Given this default role, along with their wide diversification and their shifting asset allocations, TDFs may serve as a participant’s single investment for many years.

For plan sponsors, choosing TDFs is one of the most critical decisions fiduciaries may make about an investment lineup. While TDFs represent a growing share of retirement plan assets, these investments have a degree of variability and are commonly misunderstood. Adding to the confusion are the numerous TDF options from which to select. Many TDF managers have varying risk glide paths, asset class exposures, underlying investments and active/passive management styles. All of these characteristics should be assessed by plan sponsors when selecting a TDF for their retirement plan.

Read our white paper to learn more.

1From Morningstar, “2019 Target Date Fund Landscape Simplifying the Complex” by Jeff Holt, CFA, Greg Carlson, and Patricia Oey.

AUTHORS


How can we help you manage your wealth?


Receive our wealth management insights by email

Subscribe