Target date funds get better and bigger, report finds
Target date funds are getting better – and that’s good news, because they’re also becoming the 800-pound gorilla of the workplace retirement saving scene.
The use of these funds, which invest in a mix of assets with the aim of reducing equity exposure as participants approach retirement, has accelerated sharply in recent years, due in large measure to the growth of auto-enrollment options in workplace plans.
Brightscope/Target Date Analytics reports that the TDFs account for 10 percent of total invested assets in retirement plans, a figure that is expected to hit over 28 percent by 2020. And Vanguard reported recently that 79 percent of the plans it administers offered TDFs last year, up from 13 percent as recently as 2004. Likewise, 42 percent of Vanguard plan participants used TDFs last year, up from just 2 percent in 2004.
But they’ve been criticized for maintaining levels of equity exposure too high for older investors, and for steep fees. Yet a study released Tuesday by Brightscope and Target Date Analytics reveals target date funds are improving their performance in both of those areas.
The study finds that the industry is moving toward a more conservative posture on the critical issue of fund series glidepaths – that is, the year targeted for the lowest exposure to equities. “Funds can take very different approaches to the glidepath,” explained Brooks Herman, Brightscope’s head of research. “Sometimes the landing date can be many years past the target date in the fund name.”
The Brightscope/Target Data Analytics study finds that 40 percent of TDFs are now using a “to versus through” approach to glidepath, up from 30 percent as recently as 2007. That means the most conservative asset allocation is reached in the year of the fund series name. “We like that, because it’s truth in advertising,” Herman said. “As an investor, I know what I’m getting.”
The study’s glidepath findings are consistent with an analysis by Morningstar for Reuters Money back in August, which found that losses during the summer market meltdown were far less severe for 2010 and 2015 TDF series than losses were for those funds in 2008.
The report also finds that fees have fallen in the past year, but remain “too high.” While institutional funds had average expense ratios of 75 basis points, moves by Vanguard to introduce TDFs that charge an industry-low 18 basis points prompted Fidelity Investments and TIAA-CREF to respond by introducing funds with expense ratios of 19 basis points. “That is a real reaction to what Vanguard is doing,” Herman said.
The Brightscope and Target Date Analytics study grades target date series on five criteria, including performance, fees, risk, organizational structure and strategy. Researchers analyzed 48 fund series, but graded only 38; those were the fund series old enough to have three years of operating performance data.
The top-rated fund family is American Century Investments’ Livestrong Portfolios. Four other fund series received an “A” grade: Wells Fargo Advantage, MFS Lifetime, J.P. Morgan SmartRetirement and Vanguard Target Retirement. Another seven funds received “B” grades.
Details of the Brightscope/Target Date Analytics report — “Popping the Hood” — won’t be released generally, as it is being marketed to plan sponsors, asset managers and advisers. The researchers also are happy to sell it to anyone else willing to pay its $1,200 price tag.
U.S. Cash Crude-Weak, but sweet steadier than sour
* WTI-Brent spread down to $22.60 in favor of BrentHOUSTON, Oct 18 (Reuters) - U.S. cash crude differentials
weakened on Tuesday as the transatlantic spread narrowed, but
light crudes were steadier than heavier grades due to refinery
needs.Light Louisiana Sweet sold for $25.70 a barrel over
West Texas Intermediate , down 90 cents. Mars sour
slid $1.25 to $21.25.Steadier light, sweets are a sign of conditions in
refining, with turnarounds and operational issues cutting run
rates while demand for fuel stays relatively steady, traders
said.”As we are stuck in the midst of turnarounds and refinery
issues, we need to find a way to keep supply of gasoline and
ULSD (diesel) up,” said Carl Larry of Blue Ocean Brokerage.”The easiest way is to keep running the sweets and let the
sours sit on the sidelines until everyone looks like they are
coming back on line,” he said.November LLS on Monday sold assessed $2 stronger than
December while November Mars was pegged 50 cents over December,
according to Houston Street.The WTI-Brent spread pulled in nearly $1 from
settlement on Monday, hitting $22.57 at midday versus $23.78 at
the end of regular business the previous session.Brent crude for December fell 61 cents to $109.55 a
barrel by 10:58 a.m. EDT (1458 GMT), after earlier falling
below the 50-day moving average to touch a seven-day low of
$108.45.U.S. crude for November rose 50 cents to $86.88 a
barrel, after reaching $85.55 intraday.
——————————————————————————————for recent cash crude deals)See for Reuters’ generic refining marginsSee for the WTI front/second month spreadSee for front month WTI/Brent futures spreadSee for Reuters’ assessment of Dated BrentSee for Reuters assessed tanker ratesSee for assessed domestic crude differentialsSee for outright U.S. cash crude pricesfor a list of U.S. refinery outagesfor U.S. EIA inventory reports and forecasts
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UPDATE 1-Investor group to vote against Murdochs at News Corp AGM
* HEOS says will also withhold support from Siskind and
KnightLONDON, Oct 14 (Reuters) - Rupert Murdoch’s campaign to keep
control of News Corporation suffered a fresh blow on
Friday after another key shareholder group called for his
eviction from the board of the embattled media company.Hermes Equity Ownership Services (HEOS) the shareholder
advisory service affiliated to Britain’s largest pension fund,
issued a rallying cry to investors to eject Murdoch and sons
James and Lachlan from the board at its upcoming annual meeting
on Oct. 21.The organisation, which votes on behalf of the BT Pension
Fund and more than 20 other institutional clients running $140
billion of assets, has also called for an independent
investigation into the phone hacking scandal that forced the
closure of top-selling British tabloid The News of the World.”The time is right for the company to appoint an independent
chairman to rebuild trust, help correct the governance discount,
and ensure that the interests of all investors are properly
represented,” Jennifer Walmsley, Director of Hermes Equity
Ownership Services, said.”News Corp has not reacted with sufficient urgency to
investor concerns about its board composition and corporate
culture,” Walmsley added.HEOS also said it would withhold support for the re-election
of directors Arthur Siskind and Andrew Knight, citing concerns
for their independence.The statement from HEOS follows a flurry of anti-Murdoch
lobbying from corporate governance watchdogs all over the world.Earlier this week, News Corp hit back at critics including
ISS in a letter to shareholders which said the “disproportionate
focus” on the News of the World phone hacking saga was
“misguided”.
UPDATE 1-Investor group to vote against Murdochs at News Corp AGM
* HEOS says will also withhold support from Siskind and
KnightLONDON, Oct 14 (Reuters) - Rupert Murdoch’s campaign to keep
control of News Corporation suffered a fresh blow on
Friday after another key shareholder group called for his
eviction from the board of the embattled media company.Hermes Equity Ownership Services (HEOS) the shareholder
advisory service affiliated to Britain’s largest pension fund,
issued a rallying cry to investors to eject Murdoch and sons
James and Lachlan from the board at its upcoming annual meeting
on Oct. 21.The organisation, which votes on behalf of the BT Pension
Fund and more than 20 other institutional clients running $140
billion of assets, has also called for an independent
investigation into the phone hacking scandal that forced the
closure of top-selling British tabloid The News of the World.”The time is right for the company to appoint an independent
chairman to rebuild trust, help correct the governance discount,
and ensure that the interests of all investors are properly
represented,” Jennifer Walmsley, Director of Hermes Equity
Ownership Services, said.”News Corp has not reacted with sufficient urgency to
investor concerns about its board composition and corporate
culture,” Walmsley added.HEOS also said it would withhold support for the re-election
of directors Arthur Siskind and Andrew Knight, citing concerns
for their independence.The statement from HEOS follows a flurry of anti-Murdoch
lobbying from corporate governance watchdogs all over the world.Earlier this week, News Corp hit back at critics including
ISS in a letter to shareholders which said the “disproportionate
focus” on the News of the World phone hacking saga was
“misguided”.
