The company says there is wide variation in how target-date strategies are constructed and as plan sponsors select target-date portfolios, it is important they understand the issues and differences. “There are a number of variables in target-date portfolio construction and the range of how these are approached differ greatly among investment management firms,” the paper says.
Some of the differences touched on in the paper include: the meaning of the phrase “target-date” and what that means for fund allocations, the differences between various fund families’ risk, glide path, and investment strategies, and the various benchmarking strategies.
It also touches on the recent increased interest by those in Congress in the funds and provides some considerations “that may assist committee members both in deciding whether or not these options will service their plan.” The company intends the paper to help the sponsors make the target-date fund selection decision.
“Not All Target-Date Portfolios Are Created Equal” can be downloaded from the company’s Web site here .
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