AllianceBernstein launched customized, open architecture target-date funds for U.K. corporate defined contribution plans, said William Allport, director of product strategy for the U.K. and Ireland in the company’s defined contribution investments division.
The new Customized Retirement Solutions series has 21 target-date funds.
The introduction was timed to benefit from regulations in the U.K. to implement a new state-mandated occupational DC platform in 2012 that’s likely to boost demand for default investment funds.
Asset-allocation decisions for the new funds take into account the market environment as well as traditional age-based investment factors that generally shift assets into more conservative investments as employees get closer to retirement. Diversifiers including credit and real estate strategies are also added to the mix, Mr. Allport said.
While the U.K. funds mirror some aspects of U.S. target-date funds, there are some differences in the strategic asset allocation over time. “For example, in the U.K., (employees) typically would release their retirement income through an annuity purchase,” Mr. Allport said. “So in managing the fixed-income portion of the fund, we would manage the duration of the fixed income similar to a (liability-driven investing strategy) in which the liability is based on when the annuity is expected to be purchased.”
AllianceBernstein already manages about £500 million ($810 million) for DC plans in the U.K., but Mr. Allport said the new target-date fund series represents a more concerted effort by the firm to gain a bigger share of the DC market. “The closure of (defined benefit) plans shows no sign of abating,” Mr. Allport added.