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2Q20 Target Glidepath Changes

Target Date Fund (TDF) issuers have a stated target glidepath they adhere to when building asset allocation within the different vintages. One caveat is that many issuers have the ability to adjust exposure from this target/baseline exposure based on market conditions. However, issuers also have the ability to alter this target glidepath as they see fit. Often, these changes are relatively minor, but sometimes a more significant shift may occur.

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By Clayton Fresk on August 26, 2020



Target Date Fund (TDF) issuers have a stated target glidepath they adhere to when building asset allocation within the different vintages.  One caveat is that many issuers have the ability to adjust exposure from this target/baseline exposure based on market conditions.  However, issuers also have the ability to alter this target glidepath as they see fit.  Often, these changes are relatively minor, but sometimes a more significant shift may occur. In this post we’ll go through the various target changes in the following.
 
Blackrock LifePath Conservative
 
A cousin to its very popular LifePath glidepath, the LifePath Conservative previously had lower equity exposure across the glidepath.  This quarter, Blackrock increased the equity exposure on the longer dated part of the glidepath, essentially bringing the Conservative cousin inline with the LifePath for investors with 40 years to retirement or longer.  From there, the higher exposure tapered down, and for investors within 20 years to retirement and shorter the glidepath was essentially unchanged.
 

Chart Source: Stadion
 
VantagePoint Milestone
 
VantagePoint had a slight twist/steepening of its glidepath, raising equity exposure by about 3% for younger investors farther from retirement while decreasing exposure by about 6% for older investors near or in retirement.
 

Chart Source: Stadion
 
Mutual of America
 
Mutual of America made a small adjustment to the longest dated part of the glidepath, raising equity slightly.  The rest of the glidepath remained essentially unchanged.
 

Chart Source: Stadion
 
Again, these figures represent the target exposure an issuer has set.  However, as earlier stated, the actual exposure may ebb and flow depending on if the issuer has the ability to alter exposure based on market conditions.

 

 

 

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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.

2Q20AnalysisGlide PathGlidepath 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.


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