PLANADVISER - September/October 2019 - 9

investment focus
Tactical Glide Paths
More TDF fund managers
choose to deviate from
a fund's allocation
D
uring the market crisis of 2008,
target-date funds (TDFs) came
under significant scrutiny, which
included examining glide paths and the
funds' potential response to markets.
" While most of the largest players
design glide paths they can stick
with, other managers are exploring
ways to change their asset allocation
in response to market changes, " says
Alan Hess, senior analyst, U.S. fund
research for Strategic Insights (an ISS
company, like PLANADVISER).
Some of these fund managers have
implemented tactical glide path deviation,
allowing them to stray from the
target mix if market changes suggest
this is prudent. Fund managers must
disclose this information if it is part of
their investment strategy.
Not all fund managers use such
a strategy. The 2019 PLANSPONSOR
Target-Date Fund Survey showed an
increase in the number of TDF products
that permit the manager some tactical
deviation from the glide path. There are
now 42, up from 36 in 2017, when PLANSPONSOR
last ran the survey.
When asked about her firm's use
of tactical deviation, Vice President of
Product
Strategy
Lauren LaBarbera,
with J.P. Morgan in New York City, said
its tactical asset allocation process has
existed since the inception of those
particular funds. Tactical asset allocation
" lets us react to significant market
movements and gives us the ability
to choose to rebalance or continue to
maintain overweight or underweight
positions in certain asset classes. "
Of the 10 fund managers with the
largest assets (see chart), Strategic
Insight found that only two managers,
J.P. Morgan and John Hancock, have
incorporated language into their targetdate
prospectuses that lets them alter
glide path allocations; they may do this
by up to 20%. -Judy Faust Hartnett
Tactical Deviations
Vanguard Group Target Retirement Funds
Vanguard Group Target Retirement Trusts
FIAM Target Date Blend CITs
FIAM Target Date Index CITs
Fidelity Advisor Freedom Funds
Fidelity Freedom Blend Funds
Fidelity Freedom Funds
Fidelity Freedom Index Funds
Fidelity VIP Freedom Funds
T. Rowe Price Retirement Blend Trusts
T. Rowe Price Retirement Funds
T. Rowe Price Retirement Hybrid Trusts
T. Rowe Price Retirement I Funds
T. Rowe Price Retirement Trusts
T. Rowe Price Target Funds
American Funds American Funds Target Date Retirement Series
JP Morgan JPMorgan SmartRetirement Blend Mutual Funds
JP Morgan JPMCB SmartRetirement Commingled Funds
JP Morgan JPMCB SmartRetirement DRE Commingled Funds
JP Morgan JPMorgan SmartRetirement Mutual Funds
JP Morgan JPMCB SmartRetirement Passive Blend Commingled Funds
Nuveen TIAA-CREF Lifecycle Funds
Nuveen TIAA-CREF Lifecycle Index Funds
BlackRock LifePath Dynamic
BlackRock LifePath Index
BlackRock LifePath Smart Beta
Principal Global Investments Principal LifeTime Funds
Principal Global Investments Principal LifeTime Hybrid CITs
Principal Global Investments Principal LifeTime Hybrid Funds
John Hancock Investments John Hancock Multi-Index Lifetime Portfolios
John Hancock Investments John Hancock Multi-Index Preservation Portfolios
John Hancock Investments John Hancock Multimanager Lifetime Portfolios
American Century One Choice Target Date Portfolios
American Century Retirement Date Trust
Tactical Glide
Path Deviation
Q2 2019
Assets $mm
No 470,000
No 311,000
32,300
11,800
18,300
3,600
No
No
No
No
No
No
No
No
No
No
No
No
185,00
34,800
3,100
1,051
No 120,081
12,983
35,257
89,776
2,145
Yes, 10%-20%
Yes, 10%-20%
No 131,000
6,858
6,895
Yes, 7%-20% 15,633
Yes, 10%-20% 46,992
Yes, 10%-20% 17,614
32,927
20,822
1,300
No
No
No
No 189,200
146
No
No
No
No
22,317
40,570
1,515
Yes, 10% 1,493
Yes, 10% 7,609
Yes, 10% 7,208
15,897
7,348
Yes
Yes
Source: BrightScope, a business unit of Institutional Shareholder Services (ISS) Data as of year-end 2017
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PLANADVISER - September/October 2019

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