Magnifying glass looking at financial data
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Twenty years after Fidelity Investments introduced its ClearPath line in 2005, there is a consensus around the use of target-date funds as a default investment choice for employer-sponsored defined contribution pension plans.

Target-date funds are structured to evolve each account holder’s investment mix, adjusting for their time horizon automatically. Given that many members fail to track their group investments, the fund portfolios have made a material difference in the retirement outcomes of millions of Canadians.

What’s become clear in the last decade, however, is that the performance of these funds can vary dramatically, from manufacturer to manufacturer.

“You can have a more aggressive glide path, a moderate glide path or there could be a manager out there that is very conservative,” said

In the early days, plan sponsors selected fund providers based on brand recognition and their group advisors’ analysis of those glide paths, said

“We’ve got some history,” he said. “We can really look back over the last 10 or 15 years and identify funds that have outperformed, and those that have underperformed.”

So can advisors serving clients with a mix of group and retail investments. Understanding the details of a client’s target-date fund holdings provides a more realistic view of their risk exposure.

Some managers have tilted to the technology sector. Others have added alternative investments. Meldrum is advising his plan sponsor clients to take a fresh look at their target-date funds, to ensure they’re still a good fit.

His advice for retail advisors? Check out the fund company websites — it may take a few clicks but the product details are there. If you can’t find what you need, talk to a wholesaler.