Custom Target Date Funds

For clients seeking greater flexibility, control, and precision with their target date fund construction, Capital Strategies can serve as a discretionary 3(38) fiduciary investment manager and build customized target date funds to support the specific financial goals and risk profiles of the plan participants. With over ten years of proprietary target date fund benchmark performance, we have helped clients improve outcomes for their participants, better manage fees and expenses and reduce fiduciary liability.

Key Benefits of Custom Target Date Funds

  • Ability to manage and reduce investment costs;
  • Access to best-in-class investment strategies as opposed to off-the-shelf solutions, which tend to use 100% proprietary funds;
  • Complete control over the selection and replacement of underlying investments; and
  • Flexibility to shift the glidepath due to changes in participant demographics and/or plan design structure.

Capital Strategies believes that the measure of success for a custom target date fund series is to maximize participants’ chances of reaching their retirement income goals while minimizing risks. Our approach is to:

  • Evaluate participant demographic data and behavior;
  • Incorporate the impact of plan design, especially the use of auto-features and the financial benefit structure;
  • Calculate the projected savings outcomes of plan participants; and
  • Design a glide path structure – the optimal slope and asset allocation – to optimize outcomes and manage risks.

And of course, this is not a one-time decision, but requires ongoing monitoring of capital markets assumptions, portfolio stress testing, participant demographics and usage patterns.