Birthstar has launched the second report in a CPD research series on rethinking retirement, focused on lifecycle investing with target date funds.
It covers topics such as understanding the theory behind target date funds, as well as designing and managing them.
Henry Cobbe, head of research at the firm, said that consumer demand and regulatory changes in the UK are driving the growth of solutions that are easier to use, simpler to understand, offer good value for money and create better customer outcomes.
“A key tool in this growing sector are asset allocation funds such as target date funds, which are being used as a single fund whose objectives can change over the investor’s lifecycle as time goes on.
“Within the context of asset allocation funds, target date funds differ from risk profiled or target risk funds because they also incorporate the investment time horizon within the asset allocation strategy.”
He explained that the strategy within each fund typically becomes more conservative over time, on approach to and after the target date, which is when withdrawals are expected to commence.
Birthstar launched the first in the CPD research series - aimed at helping advisers navigate the new pension freedoms with their clients - in June this year.
The research and advisory firm for asset managers and intermediaries said the series should assist with the theory and practice underpinning retirement planning from both an investment and behavioural perspective.
ruth.gillbe@ft.com
