Putnam Investments has launched TargetDateVisualizer, designed to help advisers better guide plan sponsors in selecting appropriate target-date mutual funds and collective investment trusts (CITs) for inclusion in workplace savings plans, based on specific risk-tolerance preferences and investment philosophy.
The dynamic evaluation tool seeks to provide greater clarity and insight into the underlying investment glide paths of over 100 different target-date strategies, as well as the portfolio risk levels and key performance characteristics of these popular retirement savings vehicles.
Utilising a highly engaging and user-friendly interface, TargetDateVisualizer helps identify preferred target-date strategies based on how aggressive or conservative an advisor would like to be in the early and late stages of participants’ working lives – and also how they define success overall. TargetDateVisualizer takes these dynamics into account and allows advisers to better distill appropriate target-date options to consider for their clients.
In discussing Putnam’s new tool for the retirement marketplace, Steven P McKay, Head of Defined Contribution Investment Only (DCIO) at Putnam, says: “The journey and outcome of a target-date strategy is determined by a wide array of factors, including the underlying glide path and investment composition. Putnam TargetDateVisualizer was built to assist advisers and their clients in making greater sense of the numerous target-date strategies available – so they can more successfully identify those products that are best aligned with the needs of their plans’ objectives.”
TargetDateVisualizer works by analysing the glide path of every target-date strategy, both mutual funds and CITs, with at least a three-year track record – 108 in total at present time. The tool employs an easy-to-use, interactive framework that asks a few key questions regarding investment philosophy and risk preferences, in both the early and late stages of a participant’s working life.
TargetDateVisualizer then frames how much equity sensitivity a target-date vintage has at critical points along the glide path. Subsequently, it plots the funds most aligned with the user’s risk-tolerance, resulting in a more focused set of options for consideration that can be compared head-to-head based on performance and other important risk factors. The final output provides detailed analysis that will allow advisers to document the entire review and/or selection process for their clients.
“Target-date strategies offered by different asset managers may have many features in common, but no two are exactly alike,” says McKay. “In some cases, the differences can be difficult to determine, making it hard to select strategies that are right for the goals of the plan and its participants. With its product-agnostic approach, TargetDateVisualizer should prove to be enormously helpful to advisers when embarking on the challenging, but critically important process of identifying the optimal target-date strategy for their clients.”