MASTERCLASS: Target Date Funds

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  • 01 hr 08 mins 39 secs
Target date strategies are used by such a wide range of people. Four experts discuss how needs change as investors age, the glidepath construction process, important considerations when selecting a plan sponsor, and what they think retirement plan fiduciaries will care about going forward.
  • Dan Steele, Head of DCIO - Columbia Threadneedle
  • Sarah O'Toole, Institutional Portfolio Manager - Fidelity Investments
  • Ashley diMayorca, Vice President, Product Management - PGIM Investments
  • Joe Martel, CFA, CAIA Portfolio Specialist, Multi- Asset Division - T. Rowe Price

Jenna Dagenhart: Hello, and welcome to this Asset TV Target Date Fund Masterclass. Defined contribution plans continue to evolve and so do the needs and sensitivities of target date investors as they age and approach retirement. Joining us now are four industry panelists, Ashley Dimayorca, Vice President of Product Management at PGIM Investments, Dan Steele, Head of DCIO at Columbia Threadneedle Investments, Joe Martel, Portfolio Specialist, Multi-Asset Division at T. Rowe Price and Sarah O' Toole, Institutional Portfolio Manager at Fidelity Investments. Well, it's great to have everyone with us today. Ashley, besides a strong and suitable target date fund, how can retirement plan sponsors improve retirement outcomes for participants?

Ashley Dimayorca: Thanks, Jenna. It's a pleasure and honor to join you all as we talk about something so important to us, target date funds and the successful retirement outcomes for plan participants. So thank you for having me. So I think Jenna, as we all know, unlike my parents, most of the American workforce today does not have an employer-sponsored defined benefit plan to help them both define and provide a secure retirement outcome. So with the continued waning of defined benefit plans, the defined contribution plan is playing an increasingly pivotal role in determining what our retirement futures will look like. And over the past 10 to 15 years target date funds as the overwhelming QDIA of choice or default of choice, target date funds to become the cornerstone of defined contribution plans, and I think the linchpin really of retirement outcomes. And I think in general target date funds have done a really good job of improving retirement outcomes for participants.

Ashley Dimayorca: But taking a step back, aside from target date funds, what else can plan sponsors do to help more participants have a comfortable and successful retirement? There's a lot for plan sponsors to keep an eye on, I want to acknowledge that, but I'll mention just three actions here. First, I think that plan sponsors can try to improve overall participation in the plan, so get more of their employees to become plan participants. This will just improve retirement outcomes for more of their workforce.

Ashley Dimayorca: Second, they can try to get their participants to save more. So auto features like auto enrollment and the automatic escalation of participant savings or referral rates for example, can be really effective levers. PGIM's defined contribution solutions team, which is, I think becoming somewhat of a powerhouse in DC plan research, is close to publishing some really interesting research on how to improve participation rates and how to maximize saving rates. And the research is showing us that plan sponsors maybe shouldn't just think of employer match and deferral rates as two separate levers, but kind of to look at how they affect one another in order to maximize both participation and savings.

Ashley Dimayorca: Okay, so participations and savings, I think third is just to help plan participants make good investment decisions. So obviously a suitable target date fund is paramount, but outside of target date funds, I think plan sponsors can make their core menus, so their non-target date fund options, work harder and more efficiently for more participants. I think that all my colleagues will agree, and no doubt, many of them will have some pretty interesting things to say on this topic, but I think the role of the DC plan is changing and more and more participants will be staying in the plan and using the defined contribution plan as a method for decumulating or spending down their assets. So I think core menus need to really appeal to retirees or to those close to retirement so that if they're not target date fund investors, if they're self-directing their investments they can better diversify across more fixed income options or more distinct fixed income options, inflation protection options, that kind of thing. So yeah, those are ways I think that plan sponsors can help improve outcomes.

Jenna Dagenhart:  Well, thank you. And to your point, I don't think I know anyone personally who has a DB plan these days. Now, Dan, I don't want to get your perspective as well. Why are target date funds typically the biggest fiduciary decision a plan sponsor will make?

Dan Steele: Yeah, thanks for the question, Jenna. And thanks for having me here today to talk about such an important topic. Yeah, so I've been in the DC business working with fiduciaries in some capacity or another for the last 27 years or so, and I've watched it evolve from a supplemental source of retirement to the main source of retirement income for Americans today, as Ashley just mentioned. So what's been interesting to me about this evolution that you just referred to from DB to DC plans, is that DC plans have sort of morphed into hybrid DB plans, right? So if you look at what's been successful in the DC market in terms of driving those positive participant outcomes that Ashley just mentioned, it's been automatic features, like you said, automatic enrollment, automatic deferral increases. So what behavioral finance has taught us is that leveraging that participant inertia is the best path towards securing those positive outcomes.

Dan Steele:  So you can look at target date funds as another one of those automatic features. So you push one button, you have instant diversification and a glide path, so that's why we think, at Columbia, target dates are such a great solution for DC plans. The more of these automatic features that you can add to a DC plan, the more it looks and feels like a personalized DB plan. But in terms of the question that you asked, what is the biggest risk to a plan sponsor? When you're adding all of these automatic features, in my opinion, it's the QDIA, it's the qualified default investment alternative. If I'm automatically enrolling people in the plan without their consent, how am I investing their money? So more often than not these days, it's in a target date fund. So it's critically important that plan sponsors have a comprehensive understanding of their QDIA or target date fund, and it's critical that advisors that work on DC plans and consultants are able to assist with that as well.

Dan Steele: But when you think about the fiduciary risk specific to a target date fund, one thing that I think is not often really understood by plan sponsors and some advisors is that 85 to 90% of the risk of the average target date fund is equity risk. So this seems kind of counterintuitive, when looking at a target date fund, they appear to be diversified, and the truth is they are nominally diversified, but when you look at where that risk or volatility comes from, the vast majority of it is coming from the equity market. So it's similar to the classic 60/40 balanced fund, although 60% of the assets are in stocks and 40% are in bonds, 90% of the risk comes from the equity side.

Dan Steele: Now for the most part of the last 10, 20 years, that's worked fine, right? But the question is what happens when it doesn't, what does that mean for the participating experience and the plan sponsor's fiduciary responsibilities, and I'm hopeful that's something that we can dig into as a panel during today's session.

Jenna Dagenhart: I think we certainly will. Now Sarah, plan fiduciaries of course have a number of considerations when evaluating a target date provider, how should a plan sponsor evaluate whether a provider is a good fit for their plan population?

Sarah O' Toole:  Yeah, that is a great question, and one we speak with our clients and our industry partners about quite a bit. Dan's comments about the importance of the target date strategy and a plan really reinforces, in my view, the need for plan sponsors to select a provider can be a stable and long term partner to the plan, and by extension, the participants. Of all things, a holistic assessment of the goal, the philosophy, the investment process and the resources supporting a target date strategy is essential to understanding whether a target date strategy or provider can help participants achieve successful outcomes. Every target date provider when we look across the industry has a distinct view on how they prioritize and balance multiple dimensions of risk, and we encourage plan sponsors to select a target date strategy that aligns with the goal of their plan, as well as with the behaviors and the needs of the participants they serve, and that's both today and in the future.

Sarah O' Toole: Another thing I would add here as an important area of focus is how the target date provider integrates investments with communications and technology, because solving for retirement and retirement readiness is both a savings challenge and an investment challenge. We know participants need help, and the target date provider may be in a position to provide a superior and differentiated customer experience.

Jenna Dagenhart: Joe, how can we help play and sponsors think through what's needed when they're selecting a target date strategy? What trade offs may come into play that they should consider?

Joe Martel: Thanks, Jenna. Yeah, a very good question. We've put some tips together for fiduciaries to really help them evaluate their QDIA, and one of the first tips is to evaluate what we think are two key inputs related to the glide path selection process. The first input, and really from our perspective it's the most critical one is to define the objective that you're solving for as a plan, you can't identify the appropriate glide path or target date solution if you don't know what you're solving for. We often use the analogy of a G GPS. The first thing a GPS asks you when you're trying to find directions is, "What's your destination?" It's only once you put your destination in that it provides you the route to get there or the directions to get there. And I really think it's the same thinking with the target date strategy, you need to determine what's the destination before finding the glide path that can ultimately get you there.

Joe Martel: And the question of what you're solving for really comes down to how you prioritize different risks that a a participant is going to face as they save for retirement. And it really comes down to how you think about spending power in retirement versus volatility around retirement. And the relative focus you put on each will really help you as advisor or plan sponsors determine what you want from the QDIA, and ultimately what your objectives are. You mentioned trade off, Shannon, and it's really important to understand that supporting spending in retirement and limiting volatility are competing objectives. The focus on one comes often at the expense of the other. And for example, the more you focus on limiting volatility around retirement, all things equal, that's going to ultimately lower your spending power in retirement.

Joe Martel: And ultimately it's about finding the right balance between the two that aligns with your views on the range of risks that participants face. Dan talked about market risk, but there's also risks like longevity and shortfall risk, and we really need to help plan sponsors understand each of these risks and the impact of focusing more on one risk relative to the other. So if you want to focus more on limiting drawdowns, for example, you need to understand that that's going to increase the risk of shortfall in terms of spending potential in retirement, which is a perfectly fine thing to focus on, but what we really need to do as advisors, as practitioners, we need to help plan sponsors be comfortable with the decisions that they're making and ultimately understand the impact of how they prioritize the different risks that their employees are facing.

Jenna Dagenhart: And you mentioned volatility, Ashley did participants do what we thought they would do in the first quarter of 2020, a very volatile time when the stock market corrected, and what lessons did we learn and what are the key takeaways for retirement plan fiduciaries as they evaluate target date funds?

Ashley Dimayorca: Sure, great set of questions there. So let's start with, did target date fund participants do what we thought they would in this pandemic driven market correction in the first quarter of 2020? The answer is yes and no. So first the yes, the average target date fund participant, I think reacted as we hoped and as we expected amid the volatility and the market correction. For 401K plans, trading was indeed elevated during that quarter. I think there were three of the four largest trading days in the past 10 years were in that quarter. But target date fund investors on average traded less than non-target date fund investors, which is absolutely I think a good thing for target date funds. The average target date fund participant did stay the course, did not sell out of his or her target date fund and was thus able to fully participate in the market rally that ensued following that big decline.

Ashley Dimayorca: So that's the yes, but then here's the no. So while that stoicism and inactivity of the average participant may have been technically true, I'm not sure it's particularly helpful information because there are a whole lot more younger target date fund participants than older ones. So the behavior of the average participant is actually probably more reflective or representative of a younger target date fund investor.

Ashley Dimayorca: So I think that deconstructing that average is helpful, and what we learned in the first quarter of 2020 is that older participants, by virtue of being closer to their retirement dates, were much more engaged and much more active investors than were younger target date fund participants. Simple cash flow analysis of different target date fund vintages was really illuminating. The outflows in the target date funds designed for older participants, so let's take 2020 funds and 2025 funds, for example, those outflows were really eye popping.

Ashley Dimayorca: So if we look at 2025 funds, for example, designed for investors around 60 years old, retirement insight net flows in those 2020 funds had been consistently positive in each of the eight quarter proceeding that first quarter of 2020. But in that first quarter of 2020, when the market dropped by 34%, 2020 funds suffered net outflows of 2.1 billion. So from the fourth quarter of 2019 to the first quarter of 2020, there was a turnaround of five billion in net flows. And then 2020 funds that are designed approximately for 65 year olds, it was even more pronounced, six billion came out of 2020 funds in that first quarter.

Ashley Dimayorca: So I think what we learned was that older participants sold out of their target date funds in large numbers. I think probably for two reasons, one is out of fear. They did fear driven trades. I think Alight Solutions had some interesting data around that, that following equity investors, target date fund investors did sell out of their target date funds and moved into stable value or money market funds. I think there's also a lot of interesting research and data around just older participants in general and what they did during this first quarter of 2020.

Ashley Dimayorca: And that is that they sold out of their investments, not only just out of fear, but out of need. They had to meet the financial challenges that kind of came along with this pandemic, right? There were a lot of forced retirements that got a lot of publicity, unemployment was very high. So many participants didn't really have a choice whether or not they could ride out the storm, they had to take their money out of target date funds. And I think that was really illuminating to us all, and I think that the takeaway for plan sponsors is that didn't to make sure that each stage of that glide path is really working well for participants in each age cohort or in each life stage.

Jenna Dagenhart: Those are all excellent points. And just want to quickly say something that someone I interviewed during the pandemic said, "Don't touch your face, and don't touch your 401k." I thought that was good advice. But Sarah, how do you think participants in target date strategies have fared over the past several years in terms of staying on track towards their retirement goals?

Sarah O' Toole: Yeah, so at Fidelity we've been managing target date strategies for 25 years, and over that time we've seen that target date funds have been instrumental in helping participants stay on track towards retirement, they've encouraged good investment behavior and they've delivered investment returns. So when I look at diversification of portfolios in defined contribution plans, we see that as target date adoption has grown the percentage of participants who have extreme allocations of 100% equity or 0% equity has really been cut in half over the past decade. So there's more diversification in the plans that we work with. We've also seen target date fund investors stay the course through times of market stress.

Sarah O' Toole: We were really encouraged at Fidelity last year, when we saw a lot of volatility, over 99% of our investors remained invested, and that was consistent with what we saw in prior years. And so they benefited from the rebalancing into the market when it felt uncomfortable to do so, going back to the second quarter of 2020. And when I look at this disciplined behavior it's really throughout the industry if you think about most plan sponsors, over 90%, use the target date fund as the default and over half of DC participants hold a hundred percent of their balance in a target date fund. So this disciplined behavior is prevalent in the workplace savings plans.

Sarah O' Toole: From an investment standpoint, I think what's really helped the investors is being invested in long-term strategic allocation portfolios that has delivered returns that we think are in line with what someone would need to fund their retirement income needs. I think it's also important when we think about the success of target date to note that it's the result of the combined efforts of an investment manager plan sponsor, as well as financial advisors and consultants. We all work together to build investment menus, add plan design features like automatic enrollment and matching contributions and deliver education and support to help keep participants on track. I think people saving for retirement face a lot of uncertainty, and in some cases, tremendous pressure, and target date funds at the highest level have really helped the population get on track to retirement and empower them to achieve the life they want to live in retirement.

Jenna Dagenhart:  Mm-hmm (affirmative). People might not know exactly how to manage that money every day, but they do know what year they're hoping to retire.

Sarah O' Toole: Yes, yes.

Jenna Dagenhart:  No, Dan, what are some of the risks involved with target date funds and how does that relate to what the participant experience is in a target date fund?

Dan Steele: Yeah, so I'm pretty passionate about this one, and as I'm listening to Ashley and Sarah, I'm thinking about a personal experience of my own with my mother. My mom worked in a hospital for 35 years and was just about to retire when the credit crisis hit in '09. She had her 403(b) in a target date fund, and as much as I pleaded with her not to panic, to ride it out, right around the bottom of the market she capitulated, and was about telling me, sold it all and went to a money market fund. So that's the issue with DC plans, that's what we're talking about. Folks can be getting all the right advice and education, but when things get ugly, all it takes is one click of the mouse to cause major damage to their retirement savings.

Dan Steele:  So November of '09 is an extreme example. Ashley talked about what happened at the beginning of the COVID period. Not as many people got hurt, I agree with Sarah, the market shot back up so quickly, but the truth is many people did, right? It's not really something you hear about a lot, because frankly, it's not something people talk about at cocktail parties. And I know my mom was pretty embarrassed about it, in fact she didn't tell me about it for three years later. But there was bad participant behavior at the beginning of the COVID crisis, and a lot of that did happen with folks that were pretty close to retirement.

Dan Steele: From my perspective, there's a lot of different statistics, what I look at as the manager of a DCIO firm and talking to other DCIO firm managers, the one common variable for folks that had really good years in DCIO last year was having a stable value or a capital preservation option because the flows were so heavy into those products in the spring of last year. So I don't see how there couldn't have been bad participant behavior. And then the fact that it ran up so fast, and then before you know it we were at market highs, it's kind of that much more painful, right?

Dan Steele: With all that said, look, I still think target dates are the best options for many DC participants, particularly those younger ones we talked about that can ride out the volatility. But at Columbia Threadneedle, we think target dates can improved on, just like everything else. And the area that we are focusing on is drawdowns in the severity of these periods of volatility. So relative to the other firms on the call today, we're kind of the new kid on the block in terms of target date funds. So coming into the game this late, we knew we'd had to do something innovative, and we think we have. SO what we've created is a target date that rather than allocating assets along the glide path, we allocate risk. And we also have a quantitative tactical component that uses 50 years of market data to determine what market state we think we should be in and then adjust risk accordingly. So our focus is less on investment returns and more on managing that volatility, reducing those drawdowns and creating a better participant experience that, again, try to keep folks invested, particularly those folks that are closer to retirement.

Jenna Dagenhart: And target date strategies are used by such a range of individuals, including Dan's mama, it sounds like. But Joe, how do you consider the entire population, and how different decisions affect different cohorts of plan participants?

Joe Martel: Yeah, Jenna. Designing a glide path for population is inherently a difficult problem because it's by definition a one size fits all solution that's designed to fit the entire population. And as you mentioned, this population may be very diverse with lots of heterogeneity in their characteristics, things like salaries, savings rates. So our approach, and what we believe strongly is that rather than constructing a glide path around a set of assumptions that look at the average participant, kind of average savings rates, average salaries, a more effective approach uses distributions for key inputs rather than simple point estimates based on kind of an average. And what this allows you to do is allows you to cut across the entire population rather than down the center of the population. And the benefit of this approach is that you're factoring in differences across different cohorts and considering the needs of those that don't look like the average.

Joe Martel: We also believe that, as you mentioned, it's important to understand how decisions around glide path may affect different participant cohorts differently. So for example, you may look at data about the average savings rate in your plan, the average salary, and determine that you don't need as much growth in your glide path because the average participant is saving enough. But by doing this, you may miss the fact that you could have a sizeable cohort of participants that may not be saving enough and is therefore really vulnerable to not having a successful retirement if they don't get more growth during their accumulation years. So this more vulnerable cohort may be worth focusing on a bit more to understand the impact of your decisions.

Joe Martel: Again, we're really big believers that it's all about... There's no right or wrong in decisions from glide path selection perspective, it's all, as I mentioned before, driven by your focus, your objectives. So whether you want to focus more on limiting volatility around retirement, or focus more on maximizing spending throughout retirement, that decision isn't right or wrong, but understanding the trade offs and the impact on different cohorts is really what you need to do as an advisor in helping you plan sponsors make those decisions.

Jenna Dagenhart: Sarah, anything you'd like to add about how the needs and sensitivities of target date investors change as they age?

Sarah O' Toole: Yeah, so we spend a lot of time focused on participant research based on our record keeping platform where we're record keeping for over 20 million participants in DC plans. And that piece of research is a real pillar in our overall glide path investment process. And as you look across the industry, you can see how each provider's views on participants evolves, and you see this in their strategic allocations. And I would note that leading up to retirement, across the industry, there's not a lot of different in the strategic allocation. I think Dan had mentioned that most of the portfolio risk comes from the equity allocation in many of these accumulation portfolios. But when you move closer to retirement and especially into the post-retirement glide path, you can see how each target date provider is managing the various risks, and also what they're applying in terms of insights about participants to the strategic allocation.

Sarah O' Toole: So when we think about a target date investor, they're likely to be with us for decades, so a very long term time horizon. And it's important that the portfolio and the integrated communications platform evolves as they move through their lifetime. Young investors obviously have a long time horizon and a higher tolerance for that equity risk, and they're focused on achieving total return and accumulating wealth. As investors near retirement they're more sensitive to things like inflation, to market drawdowns and the risk of outliving their assets. And then after retirement participants really fall on a spectrum across dimensions, such as expected time horizons, their sensitivity to drawdowns and the percentage that they're taking or withdrawing each year.

Sarah O' Toole: So we continue to evolve the glide path with the participant well into the retirement period. I think it's also important to note that as with capital market participant attributes will evolve over time. So someone who's 55 years old today looks a lot different than a 55 year old is likely to look in 20 years. So it's important that the glide path continues to reflect the ongoing research and insight into the at participant element.

Jenna Dagenhart: Following up on that, Ashley, as the Baby Boomers continue to transition into a retirement, can you speak to the importance of retirement income and what PGIM Investments is doing on the retirement income front?

Ashley Dimayorca:  Sure. Thanks, Jenna. Yeah, so as this cohort of Baby Boomers is transitioning into retirement we're seeing a transition in the role of the DC plan more generally. I alluded to this before, discussed it a little, but the 401K plan is basically transitioning from what was traditionally a vehicle for asset accumulation, to help participants accumulate that retirement nest egg to fund a comfortable retirement, and it's transitioning to vehicle for decumulation as well. So to help participants spend down their retirement savings in a way that can either maximize spending or to make sure their retirement savings does last a full retirement.

Ashley Dimayorca: So I think that having a DC plan be a vehicle for decumulation as well makes a lot of sense for both plan sponsors and for retired participants. For retirees, keeping their assets in the plan, it's important for several reasons. First of all, it's just cost. Outside of the plan, invest advice can be more expensive, and the investments themselves are more expensive as outside of the plan retirees typically don't qualify for institutionally priced mutual funds share classes, or even institutionally priced vehicles like CITs, for example. And then staying in the plan also means they benefit from this fiduciary oversight of retirement plan fiduciary, so someone's keeping an eye on the quality and the price of the funds that are available for investment.

Ashley Dimayorca: So for plan sponsors, keeping retirees in the plan can keep overall plan costs low for the working participants. Active plan participants or working participants can enjoy that economies of scale that comes with the retiree plan balances. I think there's also a paternalistic sort of rationale for keeping retirees in the plan, just making sure that their employees or former employees are in a safe environment, I think with their investments.

Ashley Dimayorca: So what are we doing at PGIM investments? So Prudential, our parent, has long been a leader in the retirement space. They're a top 10 defined benefit provider for example, and a leader in pension risk transfer. So we are keenly aware of the changing roles and responsibilities of the DC plan, and understand that this evolving role of the DC plan require thoughtful research and creative, customized retirement income solutions. We recently launched the PGIM DC Solutions Team whose focus really is on research, on thought leadership and on product development for this next phase of the DC plan. So in the design of retirement income products and solutions, there's an understanding that the investor behaviors, the needs, they wants, the objectives of older participants, of retired participants is much more widely varied than those of their younger colleagues.

Ashley Dimayorca: We also understand that each plan is very different, there's a wide variety in what plans want. Some plan sponsors are fervent believers in the need for offering a guaranteed income solution, while there are others that really don't want to offer any kind of annuity based investment option, so a wide variety there. So our group, the PGIM DC Investment Solutions Team is designing and developing income solutions that can be offered in a modular way, so that these income solutions can be customized overall to each plan and maybe to each participant. At a baseline, though, we do continue to believe that the target date fund will play an important role, a critical role in both accumulation and decumulation.

Jenna Dagenhart: And looking at suitability, Sarah, what are some common misperceptions about target date fund suitability?

Sarah O' Toole: Yeah, Jenna, maybe before I get to that one I'll just add on to the retirement income discussion, because I think based on the work that I'm doing with many of our plan sponsors, it's definitely top of mind and taking up more of the conversation today than it was a couple of years ago. So as far as retirement income, I think it's important to remember that today from an investment standpoint, there's many retirees using target date funds for retirement income and the the support in that, because they offer a diversified asset allocation and a broad range of withdrawal strategies that the participant could select. And at Fidelity we're pursuing multiple approaches to retirement income because retirement looks different for everyone, and the solution that they want to support retirement income will vary depending on their individual circumstances.

Sarah O' Toole: But one offering we're really excited about is our managed retirement funds, which are, again, an in-plan solution that combines a diversified investment portfolio, similar to a target date fund, with a professionally managed payout schedule. For the do it for me investor who gets to retirement and needs help with decumulation, because we can manage both the investments and the paycheck like experience for them. So definitely more to come, I think this part of the industry is definitely evolving at a pace that's pretty fast. So we're excited about retirement income, it's kind of the next stage in helping people achieve their goals.

Sarah O' Toole:  And then back to the traditional target date fund and suitability, there's always a discussion when I speak with our clients about what seems a very simple question, which target date fund is the best fit for the participants in my plan? But even though it's a simple question reaching the answer is a complex process with multiple considerations. And one area of focus during the due diligence process often includes using glide path equity exposure as a proxy for risk. So that's again, a simple and easy to understand, saying that glide paths with greater equity exposure are risky and those with lower equity exposure are conservative.

Sarah O' Toole: But we feel that this can lead to false conclusions about portfolio risk, and that's because every target date provider has an independent view on which asset classes complement equities exposure. Non-equity allocations may amplify equity exposure or reduce portfolio volatility relative to the baseline equity allocation, so we think it's important to evaluate the entire portfolio. Another misperception in evaluating suitability of target date fund is that one point along the glide path is more important than any other. The target retirement date, for example, or five years before or five years after is often deemed as the most important date in the glide path, and we encourage plan sponsors to take a more holistic evaluation so that they can better way and evaluate the trade offs that a target date provider is making throughout the entire life cycle.

Jenna Dagenhart: Mm-hmm (affirmative). And Dan, moving forward, what types of vehicles do you see as the top competitors for the flows that are currently going to target date funds in the DC market?

Dan Steele: Yeah, thanks Jenna. So my team works closely with advisors that focus on DC plans, consultants, et cetera, and I think in order to really understand target dates you have to understand the other options that you have available to you. So I would say first and foremost, I'm not forecasting the demise of target dates in any way, shape or form. Again, I think there's other opportunities out there, there's other ways to do a QDIA, for example. I think, in my experience, in this market, in the DC market, change tends to be glacial, so we'll see how soon all of these changes are implemented.

Dan Steele: But I think, there's obviously custom target dates, we're working with more and more clients that use a custom target date option. I think what I appreciate about custom target dates is, if you have a more traditional target date and it's managed by one particular fund company, there's a lot of benefits to that, but it's hard to make the argument that one fund company has the best choices for each asset class. And then as a fiduciary, if that company's midcap value fund or whatever blows up, you don't really have a lot of leverage to get that out of there, you're counting on the fund company do that, and most of them do a good job with that. So I think custom target dates will continue growth, I don't see rapid growth there.

Dan Steele: I think one kind of target date fund that I really think is conceptually is a great concept is the dynamic target date funds. So these target date funds that once a participant gets to a certain age turn into a managed account, I love that from a conceptual standpoint, it makes sense. Those younger employees, they can get into those traditional target date funds, ride out that volatility, they don't need a lot of handholding, but then as you're getting closer to retirement, you want a more customized solution, right? So the issue with that...

Dan Steele: And then also you have, it's kind of the same thing, is the next thing that I see continuing to pull away from target dates incrementally, which is managed accounts, right? You've got your traditional managed accounts that a lot of record keepers offer, and kind of similar to the dynamic target dates, the issue there is fees, right? Can you get these at a fee point where you can really understand the value proposition of paying for theses in such a fee conscious environment as DC plans? So I think traditional managed accounts are great, getting folks to utilize them is another challenge.

Dan Steele: But if I had to point to what I think long term may be the biggest challenge to traditional target dates, I would say it's probably advisor managed accounts. So what we're seeing in the DC market, as everyone knows, is just rapid consolidation, right? Consolidation of record keepers, consolidation of investment managers, consolidation of the advisors and consultants that focus on the DC market. A lot of these folks are now really having more and more sway and leverage in terms of the investments that get utilized within these plans. Understanding that the QDIA is so critical and target dates are where so many of these assets are going more of these larger and larger consolidating firms on the advisor side are rolling out these advisor managed accounts, plugging in with firms like Morningstar and really leveraging technology where they can pick the investments and they can also get it really customized at the participant level. So I think that's trend that's really worth paying attention to.

Dan Steele: And then just kind of non related, I wanted to throw in my two cents on retirement income, because I agree with Sarah and Ashley that, that trend we've seen pick up pretty rapidly since there was some changes in that kind of took some fiduciary responsibility away from plan sponsors. When we rolled out our target date product at Columbia, we surveyed advisors about target dates and questions they had, concerns they had, and so much of that feedback we got was about retirement income. What are you doing for retirement income? What can we use? So I would say that the intermediaries are very, very interested in what's going on there, and I think now that the plan sponsors have less fiduciary issues to worry about the insurance companies that are backing these products, I think you're going to see a huge uptick, eventually. Again, the pace is glacial, but retirement income is coming to DC plans, and that's a good thing.

Jenna Dagenhart: And Joe, I'll let you weigh in on retirement income as well. And then would also love to hear what suggestion you would have for plan sponsors who are primarily interested in fiduciary protection, is there anything else that you would care to add?

Joe Martel: Yeah, no, I mean as it relates retirement income, I've been with T. Rowe Price for 20 years now. And going back to my early days we've had different councils, different research projects working on solving this retirement income problem. And I think the first thing we all need to acknowledge is that it's not going to be a one size fits all solution like target dates have been for the cumulation. Retirement income is so much more personalized, your own preferences matter so much more, whether you value leaving something to your heirs, whether you value kind of guaranteed income and are willing to give up some of your liquidity for that, maybe you don't want the guarantee because you want more liquidity. So I think that's option number one, the first thing to acknowledge. And we're big believers that the retirement income problem is going to be solved through a suite of solutions, and hopefully in a way that individual participants can kind of personalize their retirement income solution so it aligns with their own preferences. We have a product in market right now that is a managed payout solution. We launched it a few years back.

Joe Martel: I think the other difficulty, quite frankly, is you're working with record keeping partners, and getting them to put different retirement income solutions on their platform. We've got a great solution, but we're struggling to get some of our record keeping partners to be able to put it on their platform. So I think as an industry, we all need to kind of come together and do what's right ultimately for the end investor, the end participants.

Joe Martel:  And kind of to your second part of your question about plan sponsors that are maybe a bit more focused on, or want something more from a fiduciary protection standpoint, I think unfortunately there's a big misperception in our business that certain decisions planned sponsors make about their QDIA in particular, like going fully passive or using something that's very conservative from a glide path perspective, somehow provides them a greater level of fiduciary protection, and the reality is this simply isn't the case. We totally understand the difficult spot many of our plan sponsors are in, there's lots of concerns in the DC market and plan fiduciaries are definitely feeling overwhelmed at the thought of litigation or increased regulatory burdens. But the reality is, for a plan sponsor to satisfy prudent standards, they need to make informed decisions, right? That's really all a fiduciary needs to do is make informed decisions that are in the best interest of their employees.

Joe Martel: And this really means that fiduciaries should have a good decision making process that they consistently follow. And plan fiduciaries, they're not required to scour the market for the cheapest possible investment option, they really should focus on what we call the value for cost proposition. And that really means that fiduciaries are free and have the latitude to consider what different investments strategies to provide to their plan participants, they just don't have to focus on cost. And in the end, fiduciary production comes down to having that process, and if a plan sponsor's really interest it in that fiduciary protection, the first thing they need to do is really ensure that they have that process down.

Jenna Dagenhart: And Dan, aside from the DC market, is there another market that you think could be a good opportunity for target date funds in the future?

Dan Steele: Yeah, so before I get into that I just want to... Just one trend, because just listening to Joe, I completely agree with Joe in terms of fiduciary responsibility, right? A target date fund, going back to PPA in '06, it's a QDIA. So the question is, is it the plan sponsor's fiduciary responsibility to get the best glide path for their population, and that's really hard to do, right? So they are covered. I was on a Morningstar call and I heard something interesting that I really didn't know, there's actually a trend in the DC marketplace of plan sponsors adding multiple target date series, which I found really interesting. Now I think a lot of that is folks having both active and passive target date series, but I could foresee in the future folks having different target date series that one might be allocating assets, one might be allocating risk, things like that.

Dan Steele: I think what plan sponsors have to balance is, you want to simplify it as much as possible, right? So I think there's already too much folks that don't use their target dates the right way, and that's incumbent upon advisors and plan sponsors. You see folks that are using a 20/40 fund for 40% of assets and then 60% are in the core lineup, it's not really how target dates are designed, right? So there's a [inaudible 00:45:33], but I just thought that was an interesting trend that more folks are adding multiple target date series.

Dan Steele: But to your original question, Jenna, on where do I see target dates being utilized, other markets. And this is not nearly the scale of the DC market, but I could see down the road target dates being used more in HSA. Today, most folks use their HSA like a checking account, right? So you're seeing mostly money markets and that type of thing utilized there, but more and more advisors are working with folks to get them to understand that. And HSA can be a great, and frankly the best tax deferred savings vehicle out there. So for folks that say to themselves, "I can afford to pay my health expenses today, but I don't know if I can when I retire." I know Sarah's company, Fidelity's done some great studies. The average 65 year old couple needing $300,000 through the course of the retirement to pay for their out-of-pocket health expenses. So I think you'll see more folks using HSAs as long term savings vehicles for retirement, because there's so much variability there in terms of what they're going to pay. And if that happens, I think target dates would make a ton of sense.

Jenna Dagenhart: That's interesting. Sarah, could you talk about some of the insights that are shaping how you think about the design of your strategy and glide path?

Sarah O' Toole:  Sure. So when I think about the glide path and the strategic asset allocation, it really reflects our long-term views on participants, capital markets and diversification. And of those, diversification is really the core principle that informs how we invest on behalf of the shareholders in the funds. We believe that diversification is the best way to manage uncertainty of the markets, and we strive to deliver portfolios that are resilient across different market environments. Over the past several years we've been emphasizing greater diversification in our glide path by adding asset classes with independent sources of return and risk, and that's really based on a belief that diversification will become more and important over the next several decades than it's been over the past decade. And that is the result of many extremes that we see in the market today, interest rates at the zero bound, high levels of debt in the developed markets, and there's also many uncertainties. So as a result we've been refining the strategic allocation to become more diversified, both within the equity allocation and the fixed income allocation.

Jenna Dagenhart: And Ashley, target date fund series that implement their glide paths with passive target date funds have benefited tremendously from an intense industry focus on expenses. Will the preference for passive continue, do you think? Does active still have a place in target date funds?

Ashley Dimayorca: Yes. In short, I think active definitely has a place in target date funds. First, all target date funds, of course, are actively managed, it's whether their glide path is implemented with index funds or with actively managed funds or a combination of both like we do here at PGIM Investments. I think that certainly there have been tremendous tailwinds in terms of asset gathering for passive target date fund series or those that implement their target date funds, the glide path with index funds. There has been, as you mentioned, this just intense focus on expenses born by investors and plan participants, throughout the investment industry there's been this focus, but perhaps most keenly for retirement plan participants and for IRA holders, for example. And Joe mentioned this, there also seems to be this perceived feeling of fiduciary protection against this rise in class action litigation against retirement plan sponsors and other retirement plan fiduciaries by offering a very low cost QDIA, they feel like they're protected against litigation, which, as Joe mentioned, just really is not the case.

Ashley Dimayorca: And finally, I think passive equity in particular has outperformed active equity in general, in what has been kind of a low volatility market environment in the period after the global financial crisis up until this first quarter of 2020. So passively implemented target date funds have had some performance tailwinds as well. So through all these reasons there's been a huge movement, the pendulum has really swung towards passive. And even stellar performing, active target date funds have seen outflows. So for this reason you see many target date fund managers that have flagship equity products develop hybrid and index target date funds as well to kind of capture those outflows coming from the more expensive active products.

Ashley Dimayorca:  No doubt, I think we'd all agree that low expenses go a very long way in improving retirement outcomes for plan participants, but there is a cost to such a myopic focus on low cost. As is the case with cars, shoes, refrigerators, cheaper isn't necessarily better, right? So yes, there is definitely a case for active going forward. I think some benefits include the ability to more broadly diversify across a larger set of asset classes. So for example, some asset classes are expensive to index, or maybe even impossible to index, if you look at private real estate, for example, really hard to index. But high yield bonds, even commodities, expensive to index. So a lot of those state funds that implement the bypass solely with index funds just don't offer diversification into those asset classes, and I think the cost of that lack of diversification is both downside risk mitigation, but also just risk adjusted returns. The more broadly you can diversify, the more efficient a portfolio you can create.

Ashley Dimayorca: And I think, of course, this probably goes without saying, but alpha, the potential for alpha is just an another, just obviously, really important aspect of active management, and that's what passively implemented target date funds just can't do. In the 10 years following the global financial crisis, it was the longest bull market in history, interest rates were low, to say the least, and markets were placid, we had lower levels of volatility and lower draw downs than we'd seen historically. So it really wasn't too much of a surprise that these actively managed equity funds in general kind of underperform their passive counterparts. But I do think there may be, with increased volatility, equity market valuations at their highs, there is this potential for active making a comeback.

Ashley Dimayorca: One other thing I'll mention is that, and I think this is really important, that active fixed income managers actually have outperformed their passive counterparts. In the past 10 years and probably going forward, there's immense potential for that as well. With capital market expectations, returns being so low, or lower at least in the next 10 years, I think every single bit of alpha that you can procure will have a very big impact on retirement outcomes. And I think that within the fixed income space alone, the index, fixed income managers, they have to be heavily invested in treasuries. So they missed that opportunity for alpha by using different asset classes with fixed income, EM debt, high yield, for example. And I think that really comes at a cost. So I think that, yes, given the change in the market environment, I think that we'll see in the next 10 years as opposed to the last, I think that there will definitely be an important place for active target date funds.

Jenna Dagenhart: In the context of the trade off sponsors they're choosing from, Joe, I'd love to get your thoughts as well on the ongoing debate about active versus passive management and the difference in those two options.

Joe Martel:  Yeah. Probably not shocking given that I work at T. Rowe Price, I agree with everything Ashley said. But there are a few key points I think I will double down on and kind of make sure to reemphasize it. I think first of all, you actually nailed it in a sense that, one, there is no such thing as a passive target date product, right? If you're an advisor and you're providing your plan sponsor with three different options for an S&P 500 fund for their lineup, you can really pick amongst the three major index providers and the experience that your plan sponsor and their employees are going to get are going to be virtually identical with maybe differences in the fee.

Joe Martel: That is simply not true in the target date space. If you put forward the three largest passive target date managers, you're going to get completely different outcomes from those different managers because they all have different glide path approaches, different views on diversification. So I think that's a really important point to make. And plan sponsors, advisors, we think starting with should we do active/passive is the wrong way to approach it. You really have to start with, what am I trying to solve for, what is my objective? And then look at kind of the implementation approaches.

Joe Martel: I also think, in terms of the active/passive debate, you also have to identify who is a good active manager. The reality is the numbers show that the average active manager underperforms passive. And we don't think as an advisor you should be choosing average active managers, right? We think active management's really hard to do. There's a few firms that have a long track record of doing that, and it's likely not by accident, it's likely part of a durable, repeatable process. So you should look for key characteristics from active managers to help make those decisions.

Joe Martel: And then the other thing I'll say, again, I think it's an important one, is it relates to diversification. I think so often that the focus between, or the discussion around active and passive coalesces around kind of access return above a certain fee, which is no doubt kind of table stakes and an important consideration, but it's also the kind of diversification that you can get within a multi-asset portfolio. And the reality is, as Ashley alluded to, kind of passive implementation simply limits the opportunity set from a diversification perspective.

Joe Martel: And we think that's a big reason why you're starting to see more target date managers come out with a blend approach, right? It allows plan sponsors to solve for that objective of achieving a lower fee profile, but it also allows them to put forward a target date solution that still has and delivers the best thinking of a range of asset managers around portfolio construction, diversification. So we think, again, the growth within the blend space is simply proof that active and passive can live together and there are benefits of each, and we shouldn't be so myopic in terms of how we evaluate whether a target date fund should be active or passive.

Jenna Dagenhart:  And blend target date strategies which combine active and passive elements are an area of growth. Sarah, could you share some thoughts on this industry trend?

Sarah O' Toole: Sure, I'd be happy to. So Fidelity has been a blend target date manager for many, many years. And what we've seen over the past three years is that blend target date is the fastest growing segment of the target date market. And when I think about blend and what it is in combining that active and passive elements in one portfolio, it really aligns with how defined benefit plans assemble their investment capabilities, as well as how most defined contribution plan core lineups look. So most planned lineups have that mix of active and passive, so it makes sense that this structure would be attractive to many plan sponsors.

Sarah O' Toole: We think blend strategies are compelling for many reasons. I think many of those reasons were mentioned by both Ashley and Joe with respect to the case for active management adding years of retirement income. But I think these strategies have the potential to deliver better outcomes, because when skilled active managers have access to a broader universe of securities, they have a better chance of outperforming the market benchmarks. They can identify mispriced areas of a market and mitigate risks relative to a passive implementation, which is essentially a rules-based implementation of an asset class.

Sarah O' Toole:  Also on blend, when I think about what drives plan sponsor decision, we've talked about cost being an important factor in a target date decision, as well as performance. Those are the two most often cited factors in target date evaluation, the blend strategies rate favorably on both. This is an area the industry that I also think is evolving, so in the blend universe we see a dispersion in terms of how much is active and how much is passive. So it's important for the plan sponsor or the advisor or consultant to understand where the manager is spending active risk and where they're implementing with passive exposures.

Jenna Dagenhart: Joe, looking at incorporating a more realistic range of inputs as you strive for better retirement outcomes, does that imply that sponsors should look at offer custom target date or managed account solution?

Joe Martel:  Yeah, I mean, I think for most plan sponsors, using a bundled or kind of "off the shelf" target date solution can deliver really good retirement outcomes for their participants. And one way is earlier I discussed kind of our approach of not just modeling or optimizing to the average, but utilizing a distribution for kind of our input assumption, and that's one way to factor in heterogeneity and to deliver good outcomes across a diverse population with a kind of a bundled off the shelf solution.

Joe Martel: But for those plan sponsors that that want custom, from our experience that's generally been those that want more control of the underlying asset class construction, or they want more control of the underlying managers. We manage custom solutions at T. Rowe Price, we don't talk to many clients that are looking to do so because they think their demographic population is so vastly different. There's a lot of differences within a population, but you look across different companies, they generally can look very similar. So you can find a solution from a glide path perspective from kind of the main off the shelf managers. So that custom, we think really, again, comes down for those plan sponsors that want kind of more control of the portfolio construction or underlying managers.

Joe Martel:  In terms of kind of personalizing the asset allocation or managed accounts, we think for the majority of an investor's life cycle, that kind of personalization probably isn't necessary or maybe not worth the cost or the required engagement to get something that would be that vastly different than what they'll get from their target date manager. But as someone does approach retirement, say they're in their 50s, that's generally when you start to see a lot more differentiation across the participant population, and when personalization can be more impactful. So we think for those that do want something that is a little bit more personalized, it probably makes more sense for the older population.

Joe Martel: We also think it's important to think about as a fiduciary and as an advisor, kind of what is the methodology that is being used for your target date fund, as well as for your kind of managed account? We think it's really important to try to find a solution that blends the two together, so the asset allocation methodology doesn't drastically change once someone hits age 50. So that the personalization is being driven by the same engine that's driving the overall asset allocation of the target day fund that the participant has been in for most of their career.

Dan Steele:  Yeah, and if I can kind of chime in on that, Jenna? So I think there's an interesting paradox when it comes to glide paths. And it's true, I mean, we've all seen the studies that asset allocation is more important than anything else. In terms of picking the right manager, picking the right stock, picking the right bond, not as important as getting the asset allocation, right? It's the same thing with the glide path, the glide path is critical, but you've heard us talk about this throughout the session, how difficult it is... If you've got a group of 50, 100, 500 disparate individuals, to try to pick the right glide path for them is very difficult. So that's the paradox there, and that's what I think we need to solve for.

Dan Steele: But my question would be, if the glide path is the most important part of the target date, wouldn't personalization be critical, right? I think if we are really going to get this thing right, then I think we do have to find a way to personalize that glide path. And it's my hope that long term, that's something that we solve for with technology, right? So if you look at what technology has born to consumers today, I would point to the two biggest changes that technology has driven is personalization and data integration.

Dan Steele: So if you start with personalization, this is what consumers expect now. When they go to their Netflix account, or they go to their Amazon [inaudible 01:03:56] account, they see personalization, and at some point they're going to expect that from us as an industry. And I think it will lead to better participant outcomes, and I agree that it's more important the closer you get to retirement.

Dan Steele: And then data integration, at the end of the day, when we just look at a standard off-the-shelf target date, how many pieces of data are we implementing for that participant? It's one, it's when they're going to retire. So we have the data, the record keepers have the data, it's out there. If we can take that data and really integrate it, again, it's going to lead to better participant outcomes. But the bottom line is, it's very difficult to do that, right? And Joe just alluded to this, you have to weigh the two, the cost versus the benefit, right? And we would hope that as an industry as the technology gets better, the cost comes down and then we're able to implement the benefit.

Jenna Dagenhart: Finally, I want to end by looking forward. Ashley, in terms of both asset gathering and investment performance, the best 10 years have rewarded some target date fund strategies while seeing others struggle. Do you think that the factors driving asset growth and performance will change in the next 10 years? And when it comes to target date funds, what do you think retirement plan fiduciaries will care about going forward?

Ashley Dimayorca: Thanks, Jenna. Yes, I think that the next 10 years is likely to look very different from the past 10 years in terms of target date fund performance and asset gathering. In the past decade or so, I think plan fiduciaries placed a high value on target date fund and plan expenses, so that index target date funds received very favorable tailwinds in terms of asset gathering. And as markets were so friendly to equity investors over the past 10 years, higher than average returns with lower than average volatility and lower than average drawdowns, I think target date funds with high levels of equity exposure across their glide paths were clearly also big winner.

Ashley Dimayorca: But I do think that the market environment going forward is likely to be very different. I think there's going to be more volatility. Markets tend to revert to long term averages, so I think what we probably are looking forward to is higher levels of equity market volatility with lower levels of return. So I think that going forward, I think retirement plan fiduciaries will put a higher value on a target date fund's ability to mitigate large losses, especially for those participants that are near retirement.

Ashley Dimayorca:  I also think, and we've all talked about this so I won't go into too much detail, but I think that the focus on low cost, of course will persist, but it will be more balanced. So for the reasons that Sarah and Joe both spoke of, I think that hybrid or blend target date funds will continue to get an increased level of focus from retirement plan fiduciaries.

Ashley Dimayorca: One thing we really haven't talked about much is inflation, and I don't think inflation really came into the target date fund discussion too much over the past 10 years, because inflation was basically nonexistent, but it certainly is a topic of conversation today, and I think that it will be probably going forward. So I think a target date fund's ability to allocate to inflation fighting asset classes like commodities, like real estate, for example, like tips, of course, will be important, particularly in that retirement income vintage where inflation poses such a risk to those retired participants, just eroding their purchasing power. So that will be important.

Ashley Dimayorca: And then finally, we've talked about this, but I think just the role of target date funds is going to change as the role of defined contribution plans change. So I think a target date fund's ability to be paired with some sort of retirement income product, like a managed account, for example, or some kind of annuity feature, anything that incorporates a target date fund with something that helps retirement spend down their retirement nest egg, I think that will be an important feature going forward as well.

Jenna Dagenhart: Well, there's so much more that we could say about target date funds, but I'm afraid we're out of time. Everyone, thank you so much for joining us.

Dan Steele: Thanks, Jenna.

Ashley Dimayorca: Thank you.

Joe Martel: Thank you.

Sarah O' Toole:  Thank you so much.

Jenna Dagenhart: And thank you for watching this Asset TV Target Date Fund Masterclass. I was joined by Ashley Dimayorca, Vice President of Product Management at PGIM Investments, Dan Steele, head of DCIO at Columbia Threadneedle Investments, Joe Martel, Portfolio Specialist, Multi-Asset Division at T.Rowe Price and Sarah O' Toole, Institutional Portfolio Manager at Fidelity Investments. I'm Jenna Dagenhart with Asset TV.


The target date is the approximate date when investors plan to retire and may begin withdrawing their money. The asset allocation of the target date funds will become more conservative as the target date approaches and for ten years after the target date by lessening the equity exposure and increasing the exposure in fixed income investments. The principal value of an investment in a target date fund is not guaranteed at any time, including the target date. There is no guarantee that the fund will provide adequate retirement income. A target‐date fund should not be selected solely based on age or retirement date.


This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.


© 2021 Prudential Financial, Inc. and its related entities. The Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.


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The views expressed in this presentation reflect those of the speaker and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied upon as investment advice and because investment decisions for any Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.


Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.


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The views expressed are as of November 2021, may change as market or other conditions change and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be appropriate for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate. Investment products are not federally or FDIC-insured, deposits or obligations of or guaranteed by any financial institution and involve, risks, including possible loss of principal and fluctuation in value.


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