Evolution of the Glidepath
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:
1. On the surface, State Street continues to offer a smooth and seamless user experience.
2. Inside the strategy, our TDFs are intricate and elegant enough to accommodate wide-ranging risk and reward scenarios. This sophisticated asset class diversification is crucial as it’s endeavoring to safeguard a person’s hard-earned life savings.
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.