November 7, 2012 at 4:06pm
Target-date strategies analyzed
Pensions & Investments recently surveyed money managers of target-date strategies. Generally, glidepath information was similar to other studies. Two items were noteworthy. First, 68.8% of managers had allocations to inflation-hedging securities in strategies at retirement. Second, all but three managers were underweight non-U.S. equities as a percentage of total equities. According to the survey data, Russell Investments, PIMCO and Northern Trust were the only managers who had a weighting to non-U.S. equities of more than 40%.
Forty-eight percent of managers had a 100% active approach to security selection; 43% of managers had a both active and passive security selection strategy, with a majority of assets being actively managed. BlackRock and AllianceBernstein were the only two firms to have substantial amounts of both active and passive strategies within the target-date strategies. State Street Global Advisors and Wells Fargo had an all-passive approach.
Among respondents, 63.3% of target-date strategy assets used a mutual fund structure; commingled vehicles held 32.3% of assets, and separate accounts comprised the remainder.
Sixty-one percent of managers used a “through retirement” strategy; the remainder used a “to retirement” approach.
For performance measurement, 83% of managers used a composite of asset class benchmarks. Two managers used benchmarks from S&P Dow Jones Indices.