| 摘要 | Data are collected and analyzed in this article on the range of glide paths of the current market of target-date funds, beginning with distant maturity dates, for young workers, through the income phase, for retirees. For the most part, the glide path is characterized here by the equity share, but for the years just around retirement, more detail is examined on other aspects of asset allocation, to better understand the risk hedging properties of the funds for retirement income. The glide paths have little changed for younger investors but become more conservative for older investors since the end of the great recession, that is, over the most recent business cycle. The dispersion of TDF paths has decreased. The typical path transition is more towards bonds at retirement. The article also includes some data and analysis of balanced funds, and it offers some policy commentary.
Target-date funds (TDFs), also known as life-cycle funds, have gained popularity among Section 401(k) plan participants, holders of individual retirement accounts, and other investors saving for retirement. Adjusting the equity share automatically downwards with the advancing age of the investor, a TDF offers a simple way to combine investment in higher-risk common stocks of various types and lower-risk fixed-income securities of various maturities and types into a single dynamic fund series. The central design insight or assumption is that the typical low-risk characteristics of human capital (the present value of labor earnings) of the average worker, especially when young, allow for high-risk equity investments at that time, but this natural hedge ebbs away with age until retirement, thereupon indicating a boost in the optimal share invested in bonds. Balanced funds also rebalance automatically asset allocations in response to market price movements, but their target allocations are fixed and not dynamic over the worker’s life cycle. These funds are more directly related to the investor’s risk preferences, perhaps on the view that the quantity and severity of all risks, including human capital, facing the worker and her household do not really change much with age.
The Pension Protection Act of 2006 created new safe harbors for employers to adopt certain automatic enrollment arrangements in defined contribution plans, including 401(k) plans, for eligible employees. The Department of Labor quickly issued regulations supporting the automatic enrollment push of PPA by creating “qualified default investment alternatives” composed only of TDFs, balanced funds and managed accounts. The thrust of this regulatory approach by the DOL to QDIAs was essentially to promote the holding of equities rather than money market and stable value funds as default funds, which had been common. The plan fiduciary is relieved of some liability when a QDIA is used if the participant fails to make an investment decision. Because it was believed by some that the possibility of market losses was not well communicated to TDF investors, especially in light of the wide range of TDF glide paths, and that the actual large losses in 2008 and early 2009 were particularly harmful to those approaching retirement, the DOL and Securities and Exchange Commission held hearings in June 2009. The agencies then proposed requirements of new fund disclosures about asset allocation policy, even past the target date, and disclosure that no guarantee is implied and that use of the TDF needs to be considered as part of broader investor characteristics such as risk tolerance and personal economic circumstances.
This paper seeks to answer three questions: 1) what is the typical current glide path and how have glide paths changed over the most recent business cycle, 2) how different are TDFs and has the dispersion of TDF glide paths increased or decreased, and 3) what is the typical glide path transition at retirement. To do this, data was collected as of June 2013 and analyzed on the asset allocation of balanced funds and on the range of glide paths of the current market of TDFs, beginning with distant maturity dates, for young workers, through the income phase, for retirees. Comparisons to earlier results in Pang and Warshawsky1 and Poterba, et al.2 give us the ability to examine recent trends, particularly over the dramatic business cycle that is still unfolding.
BACKGROUND DATA ON PLAN PARTICIPANT ASSET ALLOCATION
According to the Employee Benefit Research Institute (EBRI) and Investment Company Institute (ICI), at year-end 2011, individuals in their twenties invested 31 percent of their 401(k) account assets in TDFs and 11 percent in non-target-date balanced funds.3 By contrast, individuals in their sixties invested only 11 percent of their account in TDFs and 7 percent in balanced funds; apparently there is a significant cohort effect for TDF usage, likely related mainly to the inertia of older plan participants.
There has been an increase in the share of 401(k) plans that offer TDFs, the share of 401(k) plan participants who are offered TDFs, and the share of 401(k) participants who invest in TDFs, according to the EBRI/ICI 401(k) database. TDF assets represented 13 percent of total 401(k) plan assets at year-end 2011, up from 11 percent in 2010, and 5 percent in 2006. In 2011, 72 percent of 401(k) plans offered TDFs, up from 57 percent in 2006, and 68 percent of plan participants had plan access, up from 62 percent in 2005. About 39 percent of participants held at least some plan assets in TDFs, up from only 19 percent in 2006–a remarkable pattern of growth for a relatively new financial product (in existence since the mid-1990s) as a result of the promotion of PPA and DOL regulations.4 |
