More Diversification in Target-Date Fund Options

One-size-fits-all ‘Achilles Heel’ of traditional target-date funds now addressed

target date funds, 401k, retirementTDFs continue to evolve.

They’re kicking it up a notch in target-date fund innovation.

Custom TDF provider Stadion Money Management, known for its non-traditional investment strategies, announced the launch of TargetFit on Tuesday, a target date solution that “offers participants of the same age different allocations based on their risk profile.”

The TargetFit strategies follow the introduction of Stadion’s StoryLine in 2015, built with SPDR ETFs specifically for 401k participants in advisor-sold plans.

“TargetFit is designed to mitigate the one-size-fits-all ‘Achilles Heel’ of traditional target-date funds, offering choices while still retaining the ease-of-use of a traditional target date strategy,” Jud Doherty, president and CEO of Stadion Money Management, said in a statement

As the company notes, the number of target-date funds has grown significantly in recent years, but their “overall construct has largely stayed the same. They generally offer one glide path and often times invest in only a single fund family. Instead of offering choices, participants are provided a one-size-fits-all solution.”

TargetFit takes the popular investment vehicle, target date funds, and adds choices. Specifically, it offers three target date fund glide paths, giving options that are not traditionally available through a single target date fund family.

Stadion also built a mobile-friendly “educational experience” that provides insight into how target date funds work, investment profiles and investment risk.

TargetFit Funds utilize ETFs and are available on multiple open architecture retirement platforms.

“We’re thrilled to see TargetFit make its marketplace debut,” added Todd Lacey, Stadion Retirement’s Chief Business Development Officer. “These new strategies are coming at a time when the vast majority of target date products available offer only one glide path. The reality is retirement plan sponsors and their participants are looking for investment solutions that are more tailored to their individual needs. We believe TargetFit is the right solution at the right time and are excited to see what traction it will gain in the retirement market in the months and years to come.”

1 Comment on "More Diversification in Target-Date Fund Options"

  1. Institutional Consultant | October 5, 2017 at 10:17 am | Reply

    This is an incredibly poorly researched piece that more looks like Stadion Marketing than anything else. This probably should have a label “Sponsored Content”. Custom Solutions are not a new concept. Prudential and Merrill Lynch have had their goal manager platforms. MorningStar has its Morningstar Advice Service and there are several more. Even offering multiple different glide slopes with the same or different underlying investments is not new. Blackrock offers this capability.
    Also more is not better. More diverse investments does not mean better performing or less risky investments. Everything above seems very marketing focus with little research. For example, Stadion’s TDFs by most measures do not have great performance for the fees charged. Just adding more will not change the current statics of Stadion performance, but maybe that is the point. They want to make their performance so confusing that nobody can analyze them.

Leave a comment

Your email address will not be published.