Page 9 - DCAC December 2024 Files

Selecting Target Date Funds Involves A Rigorous Process

Plan fiduciaries should document the selection and review process, including how they reached decisions about individual
investment options. The fiduciary process for selecting and monitoring target date funds involves the traditional qualitative
and quantitative analysis utilized for mutual funds atlarge:
– Manager Tenure and Experience
– Performance Over Time
– Reasonableness of Expenses

• In addition, the fiduciary process for selecting target date funds must consider:
– Composition
➢ Asset Classes
➢ Proprietary products vs. best in class
➢ Active vs. passive

– Risk Considerations: Conservative vs. Aggressive
➢ Conservative: focus on capital preservation and downside protection, conservative asset allocation
intended to reduce volatility and replace risk and return potential withsafety
➢ Aggressive: focus on growing assets and maximizing savings during participant’sworking years, sacrifice
safety for higher return potential

– Glide Path
➢ To vs. Through
➢ Equity allocation at retirement

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