Fidelity Investments announced it is broadening its availability of the Freedom Plus Commingled Pool, a target date strategy with exposure to alternative investments.
The expanded offering will introduce 14 collective investment trusts (CITs) to the broader market, and during a time when plan sponsors are starting to offer alternative investments to participants and shake up their investment menus. Fidelity’s fourteenth annual Plan Sponsor Attitudes survey found that within the past two years, the most notable enhancements include an increased number of CITs (29%) and offering CITs for the first time (28%).
Fidelity’s research also noted an uptick in the percentage of sponsors beginning to offer CITs—more specifically, a 10% annual growth from 2018 to 2023. Additionally, more employers are considering providing the investments for the first time and increasing the number of CITs.
Another recent Morningstar report also highlighted the increase in CITs, and so much so that the investments have surpassed mutual funds as the most popular target date vehicle in the past two years.
“Alternative asset classes in a multi-asset portfolio may provide potential benefits, including improved diversification and enhanced risk-adjusted returns,” said Andrew Dierdorf, portfolio manager of Fidelity Freedom Plus CITs. “As interest in alternative investments is growing among plan sponsors and advisors, this offering builds upon Fidelity’s organizational commitment to providing customers with a range of investment choices, including options for clients interested in alternatives.”
This strategy applies Fidelity’s target date investment process and portfolio management team to a broader opportunity set, which can include liquid and illiquid alternatives. Each Fidelity Freedom Plus portfolio currently includes a strategic allocation of 5% in alternatives, specifically direct real estate, in addition to exposures in equities, bonds, and short-term building blocks that are similar to Fidelity’s other Freedom products, according to the investment manager.
With a wider availability of CITs, Fidelity says it hopes the offerings will deliver long-term investment performance in order to help investors reach financial goals.
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