Interest In Target Maturity Funds Continues to Grow
01 August 2012 (PLANSPONSOREurope.com) – Target Maturity funds or lifecycle funds remain the most popular sector for funds launched within the last six months, according to data from asset management research firm Cerulli.
Such funds are be used by plan members to save for retirement taking on different exposures to risk as the plan member matures in age.
The research shows that lifecycle funds, which tend to have long-term, fixed, strategic asset allocations, recorded net inflows of €1.07bn during May with Italy and Luxembourg the two markets driving the investment trend, most notably through Intesa and ING funds.
Nine Target Maturity funds were launched in May, attracting €487.7m net inflows combined. While predominantly retail products, the research notes a “growing” institutional interest in the sector for its ability to provide more diverse exposure compared to traditional "lifestyling" options.
The report says Italian Target Maturity funds have been a “huge” sales success, but unlike their French fonds a formule and Spanish garantizados cousins they do not come with a guarantee that all or part of an investor's capital will be repaid. According to Cerulli Italian asset managers have done their banks several large favours by circumventing costly guarantee pay-outs, but they may be storing up problems too.