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Investment Product and Service Launches

S&P Dow Jones Indices adds retirement income indexes; Northern Trust Asset Management reveals its next generation of target-date funds; and Beaumont Capital reveals a defensive TDF alternative.

By John Manganaro editors@plansponsor.com | January 28, 2016
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S&P Dow Jones Indices has launched the S&P STRIDE Index series, “aimed at blending the process of wealth creation with the need to mitigate uncertainty of in-retirement income.”

The STRIDE name is short for “Shift to Retirement Income and Decumulation,” the firm explains. The index series is a multi-asset class solution “designed to transition from growth assets to a hedged stream of inflation-adjusted retirement income based on target retirement dates.”

Dimensional Fund Advisors worked collaboratively with S&P DJI to develop the glide path, inflation hedging, and duration hedging techniques used in these indices. Each S&P STRIDE index consists of an allocation to a group of indices covering global equity, global fixed income and U.S. Treasury Inflation-Protected Securities (TIPS). Allocations are determined by five-year increments of target-date years to cover a full life cycle of accumulation, defined as working years, and decumulation, defined as retirement years.

“As life expectancy increases and plan participants depend more on their retirement plan balances to generate income, the development of benchmarks addressing these trends are key to serve as the basis for investment solutions,” suggests Philip Murphy, vice president of North American equity indices at S&P Dow Jones Indices.

In a research paper released alongside the new index series, the firm argues the goal for many people saving for retirement is essentially to maintain a specific standard of living. For these individuals, one relevant risk to manage is the uncertainty of how much retirement income their balances can afford, the firm explains.

“This uncertainty is driven by changes in interest rates and inflation," adds David Booth, chairman and co-CEO at Dimensional Fund Advisors. “The S&P STRIDE Index series represent a significant step forward in the design of target date indices, because they manage relevant risks facing participants saving for retirement. I believe these indices provide plan sponsors, consultants, and financial advisers with a better benchmark to understand how well prepared plan participants are to maintain their desired standard of living in retirement.”

To learn more about the S&P STRIDE Index Series, access the research paper here. Additional information is also at www.spdji.com.

NEXT: Northern Trust Reveals Engineered Funds

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