Target date funds provide investors with automatic asset allocation over time through the convenience of a single age- and risk-appropriate investment. With a simplified approach to investing, target date funds have become increasingly popular among employers that sponsor retirement plans and their participants. Industry data shows that target date assets have grown from
When asked about various features available in target date funds, all respondents showed a strong preference for those that are managed by multiple investment managers and are able to provide a guaranteed income stream at retirement. More than nine-in-ten (93%) of target date investors and nearly three-quarters (71%) of those who did not use them would want a target date fund that provides stronger protection against market losses in the years leading up to and including retirement. Additionally, eight-in-ten (80%) of respondents using targets date funds and two-thirds (66%) of those not using them would prefer less market risk at that stage of the investment cycle.
"These findings suggest that diversified, age-adjusted target date funds, when effectively designed, may work better than traditional offerings in bridging the gap between investor knowledge and long-term retirement objectives," said
"Like many of the latest 401(k) features, target date funds have evolved as a way to make saving for retirement easier and more automatic for the average plan investor," added
Other key findings of the study include the following:
- Nearly nine-in-ten (88%) of target date investors had interest in a target date fund that offers guaranteed income at retirement.
- Almost the same amount (86%) of target date investors felt confident they knew the definition of "diversification" compared to a smaller number (71%) of those who did not use target date funds.
- More than six-in-ten (61%) of target date investors preferred multi-manager strategies while a much smaller number (14%) preferred a single-manager.
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To view a report containing detailed findings of this study, please visit the
(1) Findings are from an online survey conducted by Synovate, a leading global market research company, during the period of
(2) According to Morningstar and
(3) The ING Lifetime Income Protection Program provides various target date asset allocation models or "portfolios." Each portfolio allocates amounts between target date collective trust funds (the "Funds") and multiple group variable annuity contracts ("Contracts") that offer guaranteed income for life during retirement through a Minimum Guaranteed Withdrawal Benefit A portfolio is not an investment separate from its allocation between the Funds and Contracts, is not an investment company and has not been registered with the
Plan administrative services provided by ING Life Insurance and Annuity Company ("ILIAC") or
ING U.S. constitutes the U.S.-based retirement, insurance and investment management operations of Dutch-based
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