Does one size fit all? When it comes to target date funds, it depends on diversification. The provider who offers the most thoughtfully curated mix of asset classes to enable the smoothest savings journey will be better able to serve the influx of participants drawn to the default. State Street has stepped up to this challenge.
Thanks to a combination of low cost, low complexity and elevated access to institutional-grade investments, the default dominates. Since the 2000s, investment in target date strategies has steeply increased. By 2021, these strategies are predicted to capture 85% of participant contributions, according to Cerulli Associates’ 2016 U.S. Defined Contribution Distribution report.
At State Street, our target date fund (TDF) glidepath has evolved to encompass a more sophisticated mix of asset classes, an approach that better manages outcomes across varied market scenarios. This precision means more as participants turn towards TDFs as their primary retirement savings solution. Our solution works on two levels:
By investing for the long run, our glidepath doesn’t react to changes in the market, but instead has been built for them — and for a future driven by the default.
The views expressed in this material are the views of SSGA Defined Contribution as at 24 June 2019, and are subject to change based on market and other conditions.
This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected.
Investing involves risk including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss.
The information provided does not constitute tax or investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. Investing involves risk, including the risk of loss of principal. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.