In part 1 of this blog, we saw how falling real interest rates reduce the retirement income a given account balance can support. In part 2, we focus on how interest rate risk may potentially be managed through an income-focused asset allocation. The S&P STRIDE (S&P Shift to Retirement Income and Decumulation) indices measure the…
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Retirement investors faced numerous investment headwinds in 2020. In addition to heightened volatility in the stock market, they had to cope with falling interest rates on both regular and inflation-indexed bonds. Real interest rates, interest rates that have been adjusted to remove the effects of inflation, are especially relevant for retirement investors because lower real…
In a previous blog, we explored the glide paths of the S&P Risk-Managed Target Date Indices. In this post, we will compare the index construction of the S&P Risk-Managed Target Date Indices with that of the S&P Target Date Indices and examine their performance. Index Construction of the Baseline S&P Risk-Managed Target Date Indices Each…
S&P DJI recently launched the S&P Risk-Managed Target Date Indices. In this post, we will explore the characteristics of these indices in detail. Each index consists of two component indices: a baseline S&P Target Date Index based on an underlying glide path and an S&P 500® Managed Risk 2.0 Index. The S&P 500 Managed Risk…
Target date funds have seen tremendous growth. At the end of 2019, assets in target date mutual funds reached nearly USD 1.4 trillion, impressive growth from USD 256 billion a decade ago.[1] Other than a brief dip in the fourth quarter of 2018, the growth of assets has been fairly stable with an upward trajectory…
Explore how our new quarterly dashboard on S&P STRIDE can help investors better understand and plan for retirement with S&P DJI’s Hamish Preston. Get the latest dashboard: https://spdji.com/documents/commentary/dashboard-stride-2020-03.pdf.
The US stock market has delivered an average annual return of around 10% since 1926.[1] But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful for investors saving for retirement to see the range of outcomes experienced historically. For example, how often…
I have probably been receiving them for years, but lately I have noticed opposing position papers in my inbox. Some claim Americans need a revival of defined benefit (DB) plans because of a looming retirement crisis, while others contend that defined contribution (DC) plans are doing great and there is no cause for alarm. DC…
2018 produced negative absolute returns across a number of asset classes, particularly international stocks. A broad benchmark of stocks traded outside of the U.S., the S&P Global ex-U.S. BMI (US Dollar) Gross Total Return Index, lost 14.18% of its value. Nevertheless, many investments kept pace with the change in cost of securing future retirement income,…
This blog post was co-authored with Dr Richard Mattison, Chief Executive Officer, Trucost, part of S&P Global On Sept. 25, 2018, Japan’s Government Pension Investment Fund (GPIF)—the world’s largest pension fund—announced its selection of two new low-carbon indices, the S&P/JPX Carbon Efficient Index and the S&P Global Ex-Japan LargeMid Carbon Efficient Index, with an allocation…
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