Ibbotson Widens Target Maturity Portfolio Offering across DC Market

Ibbotson Associates is now offering its custom target maturity portfolio construction service to financial institutions serving defined contribution plans of all sizes.

A news release said Ibbotson will now offer the service to small and mid-tier plans through plan providers as an expansion of its existing product line that had been offered to the plans in the larger end of the market.

“Now, plans of all sizes will be able to provide similar competitive offerings to their participants,” said Kim Meyer, vice president of retirement services for Ibbotson Associates, in the news release. “Our sophisticated process allows us to create customized target maturity portfolios for plans of all sizes using the investment options in the plan—a service that was previously used by only the largest plans.”

According to the release, Ibbotson uses estimates of the participant group’s average human capital (the present value of a person’s future earnings) and their financial capital (current savings for retirement) to determine an appropriate glide path, or stock-bond mix over time.

Using this approach, the glide path’s aggressiveness matches the unique characteristics of a plan’s participants. Factors considered in selecting a glide path include the existence of a defined benefit plan, employee tenure, employee risk capacity, savings rates, median salaries, and salary stability, according to the news release.