Research, analysis, and thoughts on retirement investments & the future of personalization
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.
As we’ve talked about in a couple previous posts, TDF issuers have the right to alter their glide path at any given time. Any given quarter may see numerous or few (if any) changes within the industry. Despite the tumultuous market in the 1st quarter, the industry saw minimal glide path changes.
As we all know by now, the first quarter was a tumultuous time in the market. Investors were spooked for the first time in a while, which can affect flows. Additionally, with annual retirement plan reviews occurring in late 2019 and early 2020—in advance of this surge in volatility—we believe it is possible that many plan sponsors may have switched to a new target date offering.
While investors had a pretty easy ride heading into 2020, they definitely experienced some bumpiness during the tumultuous 1st quarter. Even with this horrible first quarter taken into account, though, most target date investors have still experienced positive performance over a longer-term five-year view. However, looking back over the past years also illustrates some odd anomalies in performance.
We've previously discussed differences in TDF underlying exposure to U.S. vs International Equity exposure. Continuing that theme, let’s shift gears and look at the fixed income side of the equation. While there are many factors that can differentiate fixed income portfolios, in this post we’ll focus on the metric of the underlying duration of the fixed income holdings.
In our Class on Asset Classes post, we laid the framework for the varying exposures that Target Date Funds (TDFS) can hold as underlying investments. Using that as a basis, we can compare the various TDF series and how they differ on various metrics. In this post, we’ll start by looking at how TDFs allocate to U.S. vs. International (Non-U.S.) exposure.