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Investment Ideas 2022: Explore three key themes dominating markets where investors might uncover potential opportunities. Read More

   
Custom QDIAs

The benefits of multi-manager target date funds may be more accessible than some plan sponsors believe. GSAM can help you educate plan sponsors about the potential benefits of custom default options and how to implement them.

Dart

Qualified default investment alternatives (QDIAs) such as target date and target risk funds can be critically important tools for helping participants invest for retirement. As these options become more popular with plan sponsors and participants, some are exploring the use of custom options.

The “target date” in target date funds denotes the approximate date when investors might plan to start withdrawing their money for retirement. From such a fund’s inception, the objective is usually to have the asset allocation within the fund and the levels of associated risk change over time, so that, for example, the portfolio gradually becomes more conservative as a fund’s target date approaches. Target risk funds do not have an associated target date, but rather their assets are managed towards a certain level of risk (e.g. Conservative, Moderate, Aggressive, etc.). In both types of funds, principal is not guaranteed at any time, including when a target date is reached.

Looking beyond “off-the-shelf” options

All QDIAs are not created equal. Custom options can provide additional benefits, including:

  • flexibility to use high caliber funds in the underlying portfolio
  • opportunity to manage risk through manager and asset class diversification
  • ability to enhance due diligence on their plan

Implementing a custom QDIA doesn’t have to be complicated

The benefits of multi-manager target date funds may be more accessible than some plan sponsors believe. For advisors, it might help to focus on five key factors.

implementing-custom-qdias

GSAM Can Help:

  • Understand clients’ goals
  • Incorporate client objectives to develop and deliver practical solutions
  • Utilize our expertise to help clients identify potential risks 
  • Deliver broader diversification capabilities for plan menus and investment options