In early April, AllianceBernstein will add a new volatility management component to its Retirement Strategies target-date mutual funds to lower market risk during volatile times.
According to a statement from Seth J. Masters, chief investment officer of blend strategies and defined contribution at AllianceBernstein, “This important enhancement is the result of a multi-year firm wide research effort, which created new tools we believe can be applied to ‘smooth the ride’ and improve retirement outcomes for defined contribution plan participants. The project demonstrates our ongoing work to deliver our best thinking on target-date design to plan sponsors and investors.”
AllianceBernstein’s volatility management approach seeks to balance risk and return, placing primary emphasis on controlling risk. This differs from traditional tactical asset allocation which focuses primarily on predicting asset-class returns and attempting to time the market to take advantage of short-term opportunities to enhance returns.
“Target-date funds naturally reduce the volatility in a portfolio by reducing the exposure to equities over time as an investor approaches and moves through retirement. With volatility management, we can now more explicitly manage risk in target-date portfolios,” said Thomas J. Fontaine, head of defined contribution at AllianceBernstein in a statement.