UBS Takes Active Approach to Target Date Funds

UBS Global Asset Management has come out with a new generation of UBS TargetRetirement Collective Funds that use an actively managed approach.

According to the press release about the revamped product, the two changes to UBS’s target date funds are:

  • The funds implement an active asset allocation investment strategy based on a 25-year time-tested process, rather than using set allocations. Allocation decisions are dynamic and are driven by the firm’s risk/return expectations for global capital markets.
  • Rather than using stocks as the only way to increase or decrease the overall market risk profile of the funds, UBS actively manages the four major retirement risks faced by participants: the risk of not accumulating enough money; the risk of a downturn in market performance near retirement; the risk that inflation will erode purchasing power; and the risk of outliving retirement savings.

The firm is also looking into features such as including a “guaranteed income for life” option provided by an insurance company to help manage longevity risk, according to a press release.

“The prevailing “autopilot’ mentality should apply to the participant, but not the investment manager,” said Drew Carrington, head of UBS Global Asset Management’s Defined Contribution and Retirement Solutions Group, in the press release. “Active asset allocation and management of the key participant retirement risks are required to deliver optimal participant outcomes.’