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Happy Holidays!

It’s the holiday season once again. With the numerous parties that often come at this time of year, whether it be with coworkers, friends, or family, quite often the celebration involves food, drinks, and hard to resist treats! The preparations for these parties often include menu planning, such as depicted in the best Christmas movie ever, National Lampoon’s Christmas Vacation.

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By Clayton Fresk on December 24, 2019



It’s the holiday season once again. With the numerous parties that often come at this time of year, whether it be with coworkers, friends, or family, quite often the celebration involves food, drinks, and hard to resist treats! The preparations for these parties often include menu planning, such as depicted in the best Christmas movie ever, National Lampoon’s Christmas Vacation.

 

One can think about Target Date Funds (TDFs) the same as a holiday dinner menu. There are numerous different providers – or cooks; each with their own methodology – or recipes.

 

Each of them has a different glide path – or a meal progression. Just as some holiday meals are short and sweet whereas others are long and drawn out—especially when grandparents are in town! —some glide paths will undertake a reduction in equity sooner and others later.

 

Each of them has a different plan for which investments – or food, if you will – should go on the menu. There are some staples that most providers use, such as U.S. Large Cap Equity which, for our purposes here, we’ll call Catherine’s Dry Turkey. But, from there, providers can mix in many other investments – or the side dishes, such as the cat’s favorite lime Jell-O®.

 

Each has a different idea of which characteristics these investments should possess. Simplistically, it’s similar to the ingredients in a recipe. Providers may use passive or active vehicles or a mixture of the two, just like some folks prefer white meat and others go for dark meat. Still, remember to save the neck for Cousin Eddie!

 

And just like there is no right or wrong holiday menu, there is no right or wrong TDF. It really comes down to a matter of choosing a fund that fits best for the investors. Just like a cook must choose a menu that will best fit the tastes of those coming to dinner.

 

However, just as guests may not agree entirely with the holiday menu, any given TDF may not accommodate each investor’s taste. Some may have a lower tolerance for risk or prefer a shorter dinner – like Uncle Louis who would rather have his stogie. Others may prefer to have small cap funds included but not emerging markets or would rather have sweet potatoes than the lime Jell-O®. And even others may desire passive vs. active funds (i.e. would rather have a turkey leg rather than the neck).

 

For some investors, they may just choose to invest themselves outside of a TDF (or be their own cooks, which pretty much included everyone except good ol’ Cousin Eddie). While this is OK for some, it may not be the best for everyone. After all, some people are great cooks, and some are terrible cooks.

 

So, just as people could buy the ingredients but then hire outside help to prepare a meal —a private chef would have greatly benefited the Griswold’s)—investors also have the option of hiring someone to

 

help them invest so they may enjoy a more tailored investment solution. And, for all you Christmas Story fans out there, this may well be akin to going out for Peking Duck.

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Author: Clayton Fresk

Clayton Fresk joined Stadion Money Management in 2009 and currently serves as Portfolio Manager of Stadion’s Retirement investment strategies, which comprises oversight of Stadion’s managed account, target-date, and risk-based strategies. He provides thought leadership for Stadion’s participant level, customized retirement solutions, in order to ensure that its glide path technology and asset allocation are able to support all intermediaries in the defined contribution ecosystem. Clayton holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the CFA Society of Minnesota. He also received an MBA degree and a Bachelor's degree in Finance & Marketing from the University of Minnesota.

Christmas StoryChristmas VacationGlide PathglidepathTarget Date FundTDFTDFs
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Written By:

Clayton Fresk

Clayton Fresk joined Stadion Money Management in 2009 and currently serves as Portfolio Manager of Stadion’s Retirement investment strategies, which comprises oversight of Stadion’s managed account, target-date, and risk-based strategies. He provides thought leadership for Stadion’s participant level, customized retirement solutions, in order to ensure that its glide path technology and asset allocation are able to support all intermediaries in the defined contribution ecosystem. Clayton holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the CFA Society of Minnesota. He also received an MBA degree and a Bachelor's degree in Finance & Marketing from the University of Minnesota.


There is no guarantee of the future performance of any Stadion account. Material has been derived from sources considered to be reliable, but the accuracy and completeness cannot be guaranteed. Results based on available universe of Target Date Fund Series, which includes registered mutual funds, and non-registered collective investment funds and insurance accounts. Collective investment funds and insurance accounts are only available for investment to qualified retirement plan assets such as 401(k) plans.The commentary, analysis and opinions expressed are those of Stadion’s investment Team. The commentary, analysis and opinions referenced are as of the date of publication and are subject to change without notice. This material is for informational purposes only and should not be considered investment advice. This is not a recommendation to buy or sell a particular security. The investment strategy or strategies discussed may not be suitable for all investors.

 

The opinions expressed are those of the Stadion Money Management, LLC (“Stadion”) Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed. This is not a recommendation to buy or sell a particular security. This material is for informational use only and should not be considered investment advice.

 

Investors must make their own decisions based on their specific investment objectives and financial circumstances. Stadion Money Management, LLC (“Stadion”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Stadion’s investment advisory services can be found in its Form ADV Part 2, which is available upon request.©2019 Stadion Money Management, LLC. All rights reserved. Stadion and the Stadion S are registered service marks of Stadion Money Management, LLC. StoryLine is a service mark of Stadion Money Management, LLC.

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