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Due diligence considerations when selecting a target date investment strategy

Given the nature of their design, target date investments warrant a comprehensive evaluation approach.

By: Chris Luongo Lance McInerney Sarah O’Toole

Updated: 4/19/2023

Key Takeaways

We believe that multiple criteria should be considered when evaluating target date providers, in seeking to identify an investment strategy that may lead to successful outcomes for participants.
A target date investment strategy should align with a plan’s goal and the behaviors and needs of its participants, both now and in the future.
It is important to evaluate a target date provider’s philosophy, process, and people; the investment strategy should have a well-defined research approach that accounts for the manager’s beliefs and insights about the capital markets.
With a solid understanding of a target date provider’s investment process, including how the strategy seeks to manage risk, the performance and cost of the investment strategy can be evaluated in proper context to determine value.
The target date investor’s overall experience should also be evaluated, including assessment of a strategy’s participant communication and engagement program.

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Due diligence considerations when selecting a target date investment strategy

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