In ever increasing numbers, plan sponsors are turning to target date funds. But as recent experience has made clear, not all target date funds are created equal.
BlackRock's LifePath Funds were the industry's first target date funds. For nearly twenty years, our philosophy has been to deliver more predictable retirement outcomes with fewer negative surprises.
The single most important question to ask about a target date fund is: "What is its objective?" LifePath is founded on the belief that participants want to avoid negative surprises that can curtail retirement spending.
That's why we manage for three major risks:
Longevity Risk: Outliving Their Money
LifePath is managed to capture long-term growth when the participant's human capital — including future earnings — is highest. It's also designed to continue capturing prudent growth to support them throughout retirement.
Inflation Risk: Eroding Spending Power
LifePath's retirement mix of TIPS and real assets, combined with its 40% equity landing point, is designed to support inflation adjusted spending for 30 years after retirement.
Market Risk: Negative Surprises
LifePath seeks fewer negative surprises, especially as retirement approaches. The importance of this objective was never more evident than following the financial crisis in 2008, when 2010-dated funds experienced extreme losses.