Target date funds focus on life events

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Target date funds focus on life events

Architas and BirthStar have launched a suite of multi-asset funds aimed to help retail investors finance life events such as retirement or paying for their children’s education.

The Architas BirthStar Target Date Funds are designed for investment with an age-based or goal-based approach.

Covering target date ranges from 2015 to 2050, the funds on offer can be used to match specified life events such as retirement.

Before the target date, when withdrawals are expected to begin in order to fund a life event, the fund aims to grow the value of an investment, with a weighting towards higher-risk assets.

After the target date, once the investor has begin to make withdrawals, the fund begins to focus on protecting the value of the investment, leading to a weighting towards lower-risk assets. The fund will remain cautiously managed for a significant period after the target date.

There are seven different funds, focusing on the following target date ranges: 2015-2020, 2021-2025, 2026-2030, 2031-2035, 2036-2040, 2041-2045 and 2046-2050.

The funds aim to design out behavioural biases that could impair customer outcomes, such as naïve diversification, performance extrapolation and status quo bias.

At the same time, they are each designed to function as a potential ‘fund for life’, because they allow investors to build up, shore up or draw down an investment.

Henry Cobbe, managing director of financial technology company BirthStar, said: “By providing the whole investment journey within a single fund, we want to make properly designed and managed investing more straightforward and more affordable for all.”

Axa Wealth-owned multimanager Architas is responsible for the oversight of each fund, but global asset manager AllianceBernstein manages the portfolio of investments inside each fund.

The funds, which can be used as all-in-one vehicles for Nisas, Sipps, junior Isas and junior Sipps, are run by portfolio managers David Hutchins and Karen Watkin of AllianceBernstein. The managers’ main focus will be the asset allocation of the portfolios over time and their changing exposure.

The minimum regular investment is £50 each month. The AMC is capped at 0.55 per cent.

Mr Cobbe added: “Advisers are increasingly outsourcing asset allocation to focus more on financial planning. Meanwhile, customers without access to advice are going online to search easy-to-understand and easy-to-use solutions.”

Tim Banks, managing director of sales and client relations for AllianceBernstein, said: “Now retail investors can also potentially benefit from these purpose-built strategies, tailored towards specific investment goals, be it the first home, their kids’ university education or even retirement.”

Cedric Bucher, head of business development for Architas, said: “We aim to make investing straightforward, so target date funds are a complementary fit to our existing multi-asset range.”

He also claimed that consumer research had confirmed a need for target date funds.


Ben Willis, investment manager for Bristol-based Whitechurch Securities, said: “There is high risk at the beginning, but this is only intended for people who are in it for a long-term investment, and hopefully have diversified enough.

“With Architas already being in the multi-asset space, this is quite a good move for the provider.

“In terms of taking risk early on with these funds, you should have time to make up your losses unless you are unlucky and you invest when the markets are about to fall.

“Later on you will want to protect the gains you have made, so a lower-risk strategy makes sense.”