PLANSPONSOR - October 2017 - 8

TDF Analysis
Strategic Insight's quarterly target-date fund analysis
Equity
Exposure
In TDFs
M
anagers of target-date funds
(TDFs) generally manage a
fund's risk by growing increasingly
conservative-devoting larger allocations
to fixed income vs. equity. Plan
sponsors, too, expect to find more asset
classes prone to volatility in participants'
holdings early in their careers when
they can best tolerate the exposure. The
equity allocations by fund objectives in
both U.S. stock and non-U.S. stock follow
that model almost to a tee.
A review of target-date fund data
from Strategic Insight shows that the
top 15 target-date fund managers' overall
average use of equities varies from 60%
to 71%, with American Century at the
bottom of that range across all funds in its
TDF suite, and Principal Funds at the top.
The use of U.S. equities in TDFs varies a
similar amount, ranging from 36.98% by
Wells Fargo to 49.10% by Schwab.
Even considering the value of U.S.
stocks, with assets crossing the $1 trillion
mark in the second quarter, broader direct
international diversification appears to
be essential to all managers. At the low
end, American Century averages 14.48%
non-U.S. stock in its TDF portfolios, and,
at the high end, USAA averages 29.44%.
There is a widespread debate as
to what level of equity exposure may be
appropriate to diversify funds; it has no
universally accepted answer. In the end,
it is a fiduciary decision that plan sponsors
offering TDFs must make for their
participants. -Judy Faust Hartnett
8 PLANSPONSOR.com October 2017
Equity Allocation by Fund Objective
OBJECTIVE NAME
TOTAL
Target date in rtrmt
Target date 2000-'10
Target date 2011-'15
Target date 2016-'20
Target date 2021-'25
Target date 2026-'30
Target date 2031-'35
Target date 2036-'40
Target date 2041-'45
Target date 2046-'50
Target date 2050+
ASSETS ($MM)
$38,504
$22,707
$57,019
$155,614
$154,116
$168,784
$123,644
$124,443
$79,870
$62,833
$28,444
Equity Allocations by Top Managers
MANAGER NAME
TOTAL
Vanguard Group
Fidelity
T. Rowe Price
American Funds
J.P. Morgan Funds
TIAA
Principal Funds
American Century
John Hancock Investments
BlackRock
State Farm
Wells Fargo
Callan Associates
USAA
Schwab
Source: Strategic Insight Simfund
ASSETS ($MM)
$344,961
$214,213
$163,073
$75,562
$51,052
$38,838
$26,902
$18,563
$17,011
$16,590
$8,067
$6,600
$6,326
$4,305
$4,038
% U.S.
STOCK
19.44%
25.49%
28.75%
34.31%
39.02%
44.97%
49.63%
53.25%
54.36%
54.74%
54.62%
% NON-U.S.
STOCK
11.21%
14.75%
17.01%
19.88%
22.79%
26.17%
29.14%
30.89%
31.91%
31.96%
32.10%
% U.S.
STOCK
40.99%
44.27%
46.81%
43.64%
41.82%
47.85%
44.85%
45.03%
38.20%
43.37%
44.48%
36.98%
42.68%
37.77%
49.10%
% NON-U.S.
STOCK
26.61%
27.79%
23.58%
23.02%
23.17%
22.06%
26.37%
14.48%
23.56%
27.43%
21.70%
19.67%
23.25%
29.44%
20.18%
Assets as of August 31, 2017.

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PLANSPONSOR - October 2017

Table of Contents for the Digital Edition of PLANSPONSOR - October 2017

Moving Money
403(b) / 457 Buyer's Guide
Best Practices for the IPS
The Middle Ground
Questions, Answered
Navigating RMDs
PLANSPONSOR - October 2017 - Cover1
PLANSPONSOR - October 2017 - Cover2
PLANSPONSOR - October 2017 - 1
PLANSPONSOR - October 2017 - 2
PLANSPONSOR - October 2017 - 3
PLANSPONSOR - October 2017 - 4
PLANSPONSOR - October 2017 - 5
PLANSPONSOR - October 2017 - 6
PLANSPONSOR - October 2017 - 7
PLANSPONSOR - October 2017 - 8
PLANSPONSOR - October 2017 - 9
PLANSPONSOR - October 2017 - 10
PLANSPONSOR - October 2017 - 11
PLANSPONSOR - October 2017 - 12
PLANSPONSOR - October 2017 - 13
PLANSPONSOR - October 2017 - 14
PLANSPONSOR - October 2017 - 15
PLANSPONSOR - October 2017 - 16
PLANSPONSOR - October 2017 - 17
PLANSPONSOR - October 2017 - 18
PLANSPONSOR - October 2017 - 19
PLANSPONSOR - October 2017 - 20
PLANSPONSOR - October 2017 - 21
PLANSPONSOR - October 2017 - Moving Money
PLANSPONSOR - October 2017 - 23
PLANSPONSOR - October 2017 - 24
PLANSPONSOR - October 2017 - 25
PLANSPONSOR - October 2017 - 26
PLANSPONSOR - October 2017 - 27
PLANSPONSOR - October 2017 - 28
PLANSPONSOR - October 2017 - 29
PLANSPONSOR - October 2017 - 403(b) / 457 Buyer's Guide
PLANSPONSOR - October 2017 - 31
PLANSPONSOR - October 2017 - 32
PLANSPONSOR - October 2017 - 33
PLANSPONSOR - October 2017 - 34
PLANSPONSOR - October 2017 - 35
PLANSPONSOR - October 2017 - 36
PLANSPONSOR - October 2017 - 37
PLANSPONSOR - October 2017 - Best Practices for the IPS
PLANSPONSOR - October 2017 - 39
PLANSPONSOR - October 2017 - The Middle Ground
PLANSPONSOR - October 2017 - 41
PLANSPONSOR - October 2017 - Questions, Answered
PLANSPONSOR - October 2017 - 43
PLANSPONSOR - October 2017 - Navigating RMDs
PLANSPONSOR - October 2017 - 45
PLANSPONSOR - October 2017 - 46
PLANSPONSOR - October 2017 - 47
PLANSPONSOR - October 2017 - 48
PLANSPONSOR - October 2017 - Cover3
PLANSPONSOR - October 2017 - Cover4
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