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QDIA cooking class: The various flavors of target date blend solutions

Polina Tsybrovska

In recent years, fee and litigation pressure have intensified the active versus passive debate within the qualified default investment alternative (QDIA) category. While most target date assets are split between passively and actively managed series, a small but growing share of plan fiduciaries are turning to blend (or hybrid) solutions that combine both actively and passively managed building blocks.

 

However, when looking at the blend solutions offered by the largest target date providers, there is a lack of consensus around implementation. The result of these implementation differences is a surprising amount of variability in outcomes, putting pressure on fiduciaries to choose well. Multi-asset investment specialist Polina Tsybrovska provides insight into how Capital Group’s new Target Date Retirement Blend Series differentiates itself while pursuing its dual objective of building and preserving wealth for participants.

 

KEY TAKEAWAYS

  • A growing share of retirement plan fiduciaries are turning to blend (or hybrid) solutions that combine both actively and passively managed building blocks.
  • Finding the right mix between active and passive can be complicated by the diversity of approaches.
  • The Capital Group Target Date Retirement Blend Series differentiates itself in several ways while pursuing its dual objective of building and preserving wealth for participants.

In the paper linked below, we take a closer look at the multi-objective optimization approach. 

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Polina Tsybrovska is a multi-asset investment specialist with 14 years of experience (as of 12/31/2024). She holds a bachelor’s degree in finance from the University of Illinois at Chicago.

For institutional investors only. Not for use with the public.
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Important information about objectives, risks, charges and expenses for collective investment trusts is contained in the Characteristics Statement, which can be obtained from Capital Group or participants' plan provider or employer.
Although the target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met. Investment professionals manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.
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