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4Q19 TDF Target Changes

Target Date Fund issuers have the right to change their glide path whenever they see fit. It makes the historical and ongoing analysis of the TDF a bit trickier. Sometimes the changes can be rather large and sometimes just nuanced changes. During the 4Q19 quarter we saw a handful of changes, most of which fall in the nuanced camp.

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By Clayton Fresk on February 27, 2020



Target Date Fund issuers have the right to change their glide path whenever they see fit.  It makes the historical and ongoing analysis of the TDF a bit trickier.  Sometimes the changes can be rather large and sometimes just nuanced changes.  During the 4Q19 quarter we saw a handful of changes, most of which fall in the nuanced camp.

 

Reminder that these are changes to the target exposure, whereas the actual exposure can vary based on a number of factors, namely a tolerance band in which managers can adjust exposure based on market conditions.  We’ll discuss each below.

 

Fidelity Freedom

 

This very large TDF complex, with its numerous variations based on investment vehicle and underlying exposure, made a small change to its overarching glide path during the quarter.  While most of the glide path remained unchanged or had very small tweaks, the main change was a reduction in the landing equity from 24% to 19%.

Chart Source: Stadion

 

Franklin LifeSmart

 

This is a case where the issuer technically has two sets of targets in place – Neutral and Defensive – and can switch between the two at the discretion of the manager.  During the 4th quarter the manager switched from the Defensive path to the Neutral path, hence increasing equity for investors starting at 20 years from retirement.

Chart Source: Stadion

 

Guidestone Funds MyDestination

 

Guidestone made a small tweak to its glide path, reducing equity exposure by about 3% for longer term investors (greater than 30 years from retirement).

Chart Source: Stadion

 

Vantagepoint Milestone

 

Lastly, the Vantagepoint series issued by ICMA-RC looks to have increased equity for investors in the middle of the glide path (30 years from retirement to 10 years past).  This one again is a bit tough to quantify, as Vantagepoint utilizes a mulit-strategy component for younger investors, so it is tough to say if the change was a reclassification of that exposure or a true glide path change (it appears the images on the Vantagepoint site have not changed during 4Q, so confirming the change may prove difficult).

Chart Source: Stadion

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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.

Asset AllocationGlidepath ChangesTarget Date FundsTDFs
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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. Investors must make their own decisions based on their specific investment objectives and financial circumstances.

 

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