PLANSPONSOR - September 2017 - 32
2017 TARGET-DATE FUND BUYER'S GUIDE
AS DEFINED by the online financial encyclopedia Investopedia, " strategic " asset allocation calls
for " setting target allocations and then periodically rebalancing the portfolio back to those
targets as investment returns skew the original asset-allocation percentages. ... The concept
is akin to a buy and hold strategy, rather than an active trading approach. " On the other hand,
" tactical " asset allocation is defined as " allowing for a range of percentages in each asset class. ...
These are minimum and maximum acceptable [allocation] percentages that permit the [manager]
to take advantage of market conditions within these parameters. "
In the universe of target-date funds (TDFs), the use of strategic or tactical allocation
is increasingly being discussed, with emphasis on how TDF managers respond in difficult
market cycles, sources say.
As with any financial industry jargon, there is some wiggle room and overlap in these
definitions, and different managers will often use different language to talk about more or
less the same thing. According to Bob Collie, Seattle-based chief research strategist for Russell
Investments' Americas Institutional business and author of the Fiduciary Matters blog, when
considering target-date funds and evaluating their performance, it is crucial for plan sponsors
to understand how their fund managers are defining and weighing the possibilities of strategic
vs. tactical positioning.
32 PLANSPONSOR.com September 2017 Art by Jean Wei
TDF
CONSIDERING
The current role of
strategic vs. tactical
asset allocation in
target-date funds
APPROACHES
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PLANSPONSOR - September 2017
Table of Contents for the Digital Edition of PLANSPONSOR - September 2017
Harvesting the Right Facts and Figures
2017 target-Date Fund Buyer's Guide
Allocating Benefit Dollars
Keeping Money in the Plan
Strategic Timing
Rothification of DC Plans
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PLANSPONSOR - September 2017 - Harvesting the Right Facts and Figures
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PLANSPONSOR - September 2017 - 2017 target-Date Fund Buyer's Guide
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PLANSPONSOR - September 2017 - Allocating Benefit Dollars
PLANSPONSOR - September 2017 - 45
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PLANSPONSOR - September 2017 - Keeping Money in the Plan
PLANSPONSOR - September 2017 - 48
PLANSPONSOR - September 2017 - 49
PLANSPONSOR - September 2017 - Strategic Timing
PLANSPONSOR - September 2017 - 51
PLANSPONSOR - September 2017 - Rothification of DC Plans
PLANSPONSOR - September 2017 - 53
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