Fidelity’s Target Date glide path: A research-driven approach

August 2023

An effective target date strategy requires a glide path that provides diversification, embraces participants’ long-term investment horizons, and is supported by an adaptive investment process

Originally published in July 2023 by our U.S. partners.
Written by Andrew Dierdorf, CFA, Portfolio Manager, Global Asset Allocation, Brett Sumison, CFA, Portfolio Manager, Global Asset Allocation, Finola McGuire Foley, CFA, Portfolio Manager, Global Asset Allocation, The Strategic Asset Allocation Research Team, Global Asset Allocation

Highlights

A target date strategy’s glide path is a primary driver of participant outcomes and reflects an investment manager’s beliefs about strategic asset allocation, including asset class selection and the trade-offs between risk and return throughout participants’ evolving time horizons.
Diversification is a core principle within Fidelity’s target date strategies, providing a balance among exposures in the portfolios to help navigate the uncertainty of capital markets over long-term time periods.
Fidelity’s unique insights on the retirement goals and savings behaviors of a broad range of target date participants are central to understanding their needs and tolerance for risk.
Fidelity’s glide path is supported by investment research that considers historical and forward-looking perspectives on capital markets.
When constructing the glide path, we evaluate and synthesize research from multiple analytical frameworks to assess and balance the impact of various risks on retirement outcomes.

Line graph showing the glide path from accumulation to transition and retirement. The y-axis represents tolerance for market volatility from lower to higher. The x-axis represents investor time horizon from longer to shorter, with retirement in the half way mark. During accumulation, when the investor time horizon is longer, tolerance for market volatility is at its highest point. It is at a middling point for tolerance for market volatility at the point of retirement as the line dips to the lowest it gets at a lower tolerance for market volatility during a shorter investor time horizon - after retirement. — EXHIBIT 6: Investors’ needs change as their time horizons change.

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Authors

Andrew Dierdorf

Portfolio co-manager

Andrew Dierdorf is a portfolio manager in the Global Asset Allocation group at Fidelity Investments. In this role, he is responsible for co-managing Fidelity’s U.S. and Canadian target date portfolios.

Before joining Fidelity in 2004, Andrew worked as an actuary at CIGNA and held actuarial roles at Provident Mutual Life Insurance Company. He has been in the financial services industry since 1993.

Brett Sumsion

Portfolio co-manager

Brett Sumsion is a portfolio manager in the Global Asset Allocation group at Fidelity Investments. In this role, he is responsible for co-managing Fidelity’s U.S. and Canadian target date portfolios.

Before joining Fidelity in 2014, Mr. Sumsion held various positions at DuPont Capital Management, Inc., including that of managing director of asset allocation and portfolio manager. Previously, Mr. Sumsion worked at Strategis Financial Group, Inc., where he was chief executive officer and vice-president of asset allocation research. He has been in the investments industry since 2001.

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