New custom glide paths are built by J.P. Morgan, the only active TDF manager to achieve a Morningstar Gold rating2
SPRINGFIELD, Mass., Sept. 17, 2018 – The MassMutual RetireSMARTSM Target Date Funds, available through 401(k)s and other defined contribution retirement plans offered by Massachusetts Mutual Life Insurance Co. (MassMutual), now offer enhanced glide paths subadvised by J.P. Morgan Asset Management Inc. (J.P. Morgan). The fund family will now be called the MassMutual RetireSMART by J.P. Morgan Target Date Funds.
The new glide paths are available within the 12 MassMutual RetireSMART TDFs, ranging from the In Retirement Fund to the 2060 Fund. The MassMutual RetireSMART Target Risk Funds are not being subadvised by J.P. Morgan.
“MassMutual is pleased to introduce our ‘next generation’ glide paths from J.P. Morgan to meet the investment needs of our retirement savers, no matter where they are on their journey to or in retirement,” said Tina Wilson, Head of MassMutual’s Investment Solutions Innovation. “Our new glide paths are more sensitive to balancing investment risk and investors’ goals, especially as retirement savers approach and enter retirement.”
“MassMutual has an in depth knowledge and understanding of the issues retirees face and we’re excited to build an integrated solution alongside them to solve for those issues,” said Anne Lester, Head of Retirement Solutions for J.P. Morgan Asset Management. “We look forward to delivering a custom solution that maximizes the outcomes for target date fund holders through MassMutual’s RetireSMART by J.P. Morgan Target Date Funds.”
Glide Path Principles
As the subadviser, J.P. Morgan will create a glide path using its industry recognized long-term capital market assumptions and MassMutual participant data. J.P. Morgan employs four main principles to managing glide paths:
- Defining success as maximizing the number of retirement savers who attain an adequate level of income replacement at retirement;
- Designing glide paths to withstand the stresses of real-life saving and withdrawal patterns;
- Dynamically managing the multi-faceted risks of defined contribution investing, balancing the need to minimize risk and maximize returns; and
- Employing a well-diversified glide path allocation strategy.
In addition, J.P. Morgan will provide tactical asset allocation expertise to take advantage of short- to intermediate-term opportunities.
J.P. Morgan and other asset managers are increasingly focusing on the asset allocation strategies within glide paths, especially as retirement savers approach and enter retirement, according to Wilson. Many pre-retirees and retirees are unaware of the market risks they face and often expose themselves to too much or too little risk, she said, pointing to MassMutual’s proprietary research and experience as a retirement plan recordkeeper.
The MassMutual Retirement Savings Risk Study3 recently found that 94 percent of pre-retirees and 92 percent of retirees “strongly agree” or “somewhat agree” that it is important to take steps to avoid major stock market losses right before retirement. One in two pre-retirees (49 percent) and one in three retirees (32 percent) are apprehensive about taking too much investment risk, the study found.
Meanwhile, the study found that 59 percent of pre-retirees and 32 percent of retirees describe their primary investment strategy as focused on either “aggressive growth” or “moderate growth,” an indication that many pre-retirees and retirees may be taking more risk than they realize, according to Wilson.
Glide path construction is a critical factor in helping retirement investors manage risks, and J.P. Morgan has a focus on constructing and managing a glide path that accounts for the many risks participants face leading up to and in retirement.
The MassMutual RetireSMART Funds, which have $2.43 billion in retirement assets under management as of June 30, 2018, feature a multi-manager approach and highlight the benefits of active management.
J.P. Morgan is a leader in the target date fund space and the only active TDF manager to achieve a Morningstar Gold rating2, with the J.P. Morgan SmartRetirement team led by fund manager Anne Lester receiving the 2014 Morningstar U.S. Fund Manager of the Year Award in the Allocation category4. J.P. Morgan’s target date series has amassed over $100 billion in assets under management over the past decade, and the firm also pioneered target date fund evaluation through its Target Date CompassSM tool, which advisors across the country routinely access for custom, provider-agnostic target date evaluations.
“MassMutual’s new glide paths managed by J.P. Morgan are available later this month to both existing MassMutual RetireSMART TDF investors as well as new investors whose employers select our TDF family,” Wilson said. “The new glide paths are the latest innovation from MassMutual to help our customers secure their financial futures and protect the ones they love."