Jul 19, 2012 ---
Standard & Poor’s designed its new Target Date Style Index Series to help plan sponsors with comparisons for “to” versus “through” glidepaths on target-date funds.
The S&P Target Date Style Index Series comprises a set of
multi-asset class indices, each corresponding to a different target retirement
date. Each index is fully investable, with varying levels of exposure to the
asset classes determined during an annual survey process. These new indices
classify funds, according to their asset allocation and glide paths, into two
- "To" funds have relatively conservative glide paths and
aim to emphasize market risk sensitivity around the retirement date; while
- "Through" funds are relatively more aggressive and aim
to be more sensitive to longevity risk at, and beyond, the retirement date.
For defined contribution plans that wish to incorporate more
sensitivity to market risk, sponsors may screen for target date funds pursuing
a "to" style, and evaluate those funds relative to an S&P Target
Date To Index. Conversely, sponsors may screen for target date funds
pursuing a "through" style if it is more appropriate for their plans
to be more sensitive to longevity risk, and can compare such funds to an
S&P Target Date Through Index.
contribution plans become increasingly important, we are excited to augment our
S&P Target Date Indices lineup to help sponsors take into account both
market and longevity risk sensitivity to their fund evaluation process,” said
Craig Lazzara, senior director at S&P Dow Jones Indices.
Besides acting as benchmarks, each index is fully
investable, S&P said, with varying levels of exposure to asset classes
determined during an annual survey process. The current universe of eligible
asset classes include: U.S. large cap, U.S. mid cap, U.S. small cap,
international equities, emerging markets, U.S. real estate investment trusts,
core fixed income, cash equivalents, Treasury inflation-protected securities,
and high-yield corporate bonds. Each of the funds invests in these categories
through exchange-traded funds (ETFs.)