An insightful approach to target date fund evaluation
For retirement plan fiduciaries who are legally responsible—and potentially liable—for prudently selecting and monitoring target date funds (TDFs), a sound investment evaluation process has never been more important.
The TDF universe has grown bigger and more complex, and is subject to greater regulatory scrutiny. Funds sharing the same target date often have vastly different asset class mixes, glide paths and fees—all of which can affect investment performance and outcomes. The right TDF for one plan may be wrong for another. And funds selected even in the recent past may no longer be appropriate today, based on changing plan goals and participant needs.
Navigate the TDF universe with Target Date Compass
Target Date Compass can help you identify target date funds and simplify complex decisions:
- Clarify participant needs and behaviors, as well as plan goals
- Narrow the universe to funds most closely aligned with plan goals and participant needs
- Compare and select funds based on unbiased third-party data
- Monitor existing target date offerings and explore potential replacements
- Document the processes used to help comply with fiduciary requirements
Target Date Compass offers a holistic process for plan fiduciaries to evaluate and select TDFs, and may be looked on to help meet six of the eight considerations described in the DOL Tips.
—Groom Law Group
How Target Date Compass empowers better decisions
Target Date Compass debuted in 2008 as a first-of-its-kind tool and quickly set the industry standard for TDF evaluation, selection, documentation and monitoring. Today it remains the go-to resource for advisors seeking to inform some of their clients’ most critical plan investment decisions.
An objective, documented and repeatable process
At the heart of Target Date Compass is a map grouping together funds with similar investment orientations. Funds are plotted into one of four Target Date Type quadrants based on two key factors that may drive retirement outcomes—equity exposure at the target date and breadth of asset class diversification.
Three steps to finding the right target date fund
1 | Determine the plan’s Target Date TypeSMAnswer five questions, using our third-party vetted questionnaire,* to help plan decision-makers identify the Target Date Type that best matches plan goals and participant needs
2 | Compare and select fundsAnalyze TDFs that may be appropriate for the plan, using custom Target Date Analysis reports to guide and document decisions
3 | Perform ongoing due diligenceRerun the analysis regularly to confirm that fund selections remain aligned with plan goals or to explore new alternatives
Based on 32 years of experience working on questionnaires focused on helping individuals and organizations assess investment choices, it is my judgment that the Target Date CompassSM questionnaire is objective and balanced.
— Mathew Greenwald, Ph.D., President, Greenwald & Associates*
Robust analytics to help you make informed target date fund decisions
TARGET DATE COMPASS offers easy-to-understand charts and graphs, and streamlined content to help financial advisors and plan sponsors make objective fund assessments and informed decisions.
Use our customized Target Date Analysis reports to:
- Compare equity exposure along the glide path, including the critical years immediately before and after retirement
- Measure breadth of diversification across up to 12 underlying asset classes
- Evaluate both mutual fund and CIT performance, including total return, rolling returns, calendar year results and risk/return metrics
- View key data points for each target date series, including underlying fund information, fund structure and manager tenure
- Make quick and easy fee comparisons, based on both gross and net expense ratios
Learn more about J.P. Morgan’s Target Date Compass
Contact your J.P. Morgan representative