Investing

Custom TDF Data Shows Plan Sponsors Aligning Assets for Different Demographics

The Defined Contribution Institutional Investment Association has issued a first-of-its-kind report about allocations in custom target-date funds (TDFs), and while plan sponsors' data is aggregated for the report, Joshua Dietch, from T. Rowe Price and a co-contributor to the research, said each plan has “unique rationales for doing what they did.”

Number of Pension Buy-Out Deals Growing Each Year

“A big driver of the 2018 buy-out sales was a combination of mid- to large-PRT deals,” says Eugene Noble, research analyst, LIMRA Secure Retirement Institute. “We also saw two new insurance companies enter the PRT market this year.”

DC Plan Participant Use of TDFs Continues to Grow

While target-date funds (TDFs) are intended to automatically diversify retirement plan participants’ portfolios, Vanguard found nearly one-third mix TDFs with other investments and “are pursuing what appear to be reasonable diversification strategies.”

Cerulli Foresees Increased Use of Managed Accounts in DC Plans

“Growing emphasis on financial wellness, concerns about lack of retirement income options within employer-sponsored plans, increasing customization for the participant, and fiduciary concerns could spur additional growth in managed accounts,” Cerulli contends.

Art by Jenice Kim

Responsible Approaches to Tactically Managing TDFs

Target-date fund (TDF) providers use tactical strategies to support goals of the funds’ glide paths, but responding to a report from a professor of finance at London Business School, providers question whether there is a point where a tactical approach goes too far.

Trend in TDF Move to Passive Management Continues

Sway research finds target-date series that invest in passively managed underlying funds, as well as those that invest in collective investment trusts (CITs) have been increasing, while target-date series that invest in actively managed underlying funds saw their market share fall.

LDI Strategies and Preparing DB Plans for Recessions

Speakers on a PGIM Fixed Income webcast offered practical steps pension plan sponsors can take today and over time to protect funding levels; they suggested liability-driven investing is a smart way to “get off the funded-status rollercoaster.”