The retirement landscape is getting increasingly more complex. We understand the challenges that come with navigating this changing world, which is why our Target Date Solutions don’t just perform in spite of change—but because of it.
With an active, long-term approach and a robust glide path built to address a spectrum of risks, the slightest tilt—or the smallest adjustment—offers the potential to bring the world back into balance.
How We Think
At the core of everything we do is a deeply rooted reality: You need a solution that both helps plan sponsors manage risks, and also helps participants across a wide range of demographics accumulate the income they will need to last a lifetime.
What We Build
Helping to provide participants with income in retirement is a primary driver behind our investment approach. This means providing solutions that are actively managed through retirement—not just up to their retirement date.
Three differentiators help us reach this goal:
Retirement Glide Path
Target Glide Path
How It Delivers
It all adds up to proven performance for you and your clients. A robust glide path design, a disciplined tactical allocation process, and strong actively managed underlying funds. All three components of our Target Date Solutions seek to deliver consistent, long-term investment performance and drive better retirement outcomes.
See the Strength in Our Retirement Fund Performance
1 Figures reflect the aggregate performance of the Retirement 2005 through Retirement 2060 Funds. Of the Retirement Fund series, 10 of 12 funds, 12 of 12 funds and 12 of 12 funds outperformed their benchmarks for each of the 3-, 5-, and 10-year periods ended December 31, 2016. For most current month-end performance visit www.troweprice.com/adjustments. Past performance cannot guarantee future results.
2 The average across one-year rolling periods was 60%. To account for the differing inception dates of each Retirement Fund, these outperformance averages were time weighted—that is, the results are based on the total performance periods in each time frame provided by each fund. Because glide-path effects—such as the level of equity exposure—can dominate fund performance relative to common target date indexes (such as those maintained by Standard & Poor’s), T. Rowe Price has created its own combined passive benchmarks for the Retirement Funds. These benchmarks are constructed from four indexes that reflect the broad asset classes in the underlying RF portfolios: U.S. Equity: The Russell 3000® Index, Non-U.S. Equity: The MSCI All Country World Index ex USA, Fixed Income: The Bloomberg Barclays U.S. Aggregate Bond Index, Inflation Focused Fixed Income: The Bloomberg Barclays U.S. 1–5 Year Treasury TIPS Index.
The combined benchmarks mirror the strategic allocations for each fund as they move along their glide paths but do not include tactical adjustments. The combined passive benchmarks allow us to measure the value added or detracted by T. Rowe Price via tactical allocation and active security selection. This study is as of December 31, 2016 and is conducted annually.
3 38 of 39 funds outperformed the S&P Target Index for the 1-year period ended 3/31/17. 35 of 36, 35 of 36 and 23 of 24 outperformed the S&P Target Index for the 3-, 5- and 10-year periods ended 3/31/17, respectively. S&P Target Date Index is a benchmark series reflecting the consensus asset allocation and glide path of a subset of Target Date Funds that generally pursue investment policies characterized by declining total equity exposure after retirement and a relatively aggressive total equity exposure near retirement.
The principal value of the Retirement Funds and Target Funds (collectively the “Target Date Funds”) is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The Target Date Funds’ allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The Retirement Funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term retirement withdrawal horizon. The Target Funds emphasize asset accumulation prior to retirement, balance the need for reduced market risk and income as retirement approaches, and focus on supporting an income stream over a moderate postretirement withdrawal horizon. The Target Date Funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The key difference between the Retirement Funds and the Target Funds is the overall allocation to equity; although they each maintain significant allocations to equities both prior to and after the target date, the Retirement Funds maintain a higher equity allocation, which can result in greater volatility over shorter time horizons. Diversification cannot assure a profit or protect against loss in a declining market.