July 19, 2012

S&P Launches TDF Style Index Series

Sponsors can compare ‘To-’ and ‘Through-’ style funds

S&P Dow Jones Indices launched on Thursday an index series to help defined contribution plan sponsors screen and monitor target-date funds.

The series includes a set of multi-asset class indexes and provides separate comparisons for “to” glidepaths and “through” glidepaths.

“As defined contribution plans become increasingly important, we are excited to augment our S&P Target Date Indices lineup to help sponsors take into account both market and longevity risk sensitivity in their fund evaluation process,” Craig Lazzara, senior director for S&P Dow Jones Indices, said in a statement.

“In equities, we have two styles: Growth and Value,” Lazzara told AdvisorOne on Thursday. “In the target-date world, we have To and Through. We can identify in the survey [funds] that seem to behave in a distinctly To fashion, those that behave in a distinctly Through fashion. To and Through became the basis of subsidiary that shows the specialization of the providers and fund families. They give you as a sponsor or as a target-date fund provider, a more precise way of benchmarking what the fund is doing.”

The new To and Through styles are a subset of the larger target-date series that has been available since about 2007, Lazzara added. Data is compiled annually through a survey of SEC filings by fund families to determine what asset classes are represented.

If assets classes come up frequently enough, S&P looks at what percentage ownership the fund family has of that class. Eligible asset classes include U.S. large-cap, U.S. mid-cap, U.S. small-cap, international equities, emerging markets, U.S. REITs, core fixed income, cash equivalents, TIPS and high-yield corporate bonds.

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