T-Rowe Price made enhancements to its target date retirement product portfolios that it said are “designed to help improve retirement outcomes and address the headwinds investors face in achieving retirement security, including longevity risk, inflation risk, and market risk.”
As part of what it called the “next evolution” of target date retirement products, the firm said that, “over a two-year period” starting this April, it plans to “gradually increase” equity exposure in the Retirement and Target portfolios’ glide paths early in the accumulation years and post-retirement and add emerging markets and U.S. large-cap core equity strategies to further diversify the underlying investments.
T-Rowe Price will raise the equity allocation of the retirement glide path at the start of the investing lifecycle (30 or more years from retirement) to 98% equity from the current 90% equity. The firm will also: Hold the 98% equity allocation constant until 30 years from retirement; maintain a 55% equity allocation at retirement; and raise the equity allocation after retirement, reaching a final 30% equity allocation 30 years after retirement, an increase from the current 20% allocation, it said.
For the target glide path, the company will boost the equity allocation of the glide path at the start of the lifecycle to 98% equity from the current 90% and also: Hold the 98% equity allocation constant until 35 years from retirement; maintain a 42.5% equity allocation at retirement; and raise the equity allocation after retirement, reaching a final 30% equity allocation 30 years after retirement, up from 20% now, it said.
The firm also added two investment strategies to the underlying building blocks of several target date products, it said. Emerging Markets Discovery Stock will be added to all the firm’s target date strategies, while U.S. Large-Cap Core will be added mainly to actively managed strategies, it noted.
Bloomberg, MSCI Widen ESG Fixed Income Index Suite
Bloomberg and MSCI expanded the Bloomberg Barclays MSCI ESG Fixed Income Index suite with the global launch of nine environmental, social and governance high-yield indexes. The new indices incorporate ESG considerations in underlying fixed income indexes and are co-branded as the Bloomberg Barclays MSCI ESG High Yield Indices.
The family of high-yield bond benchmarks include three variants for the U.S., Pan-Euro and global markets: The Bloomberg Barclays MSCI High Yield SRI Indices, Bloomberg Barclays MSCI High Yield Sustainability Indices and Bloomberg Barclays MSCI High Yield ESG Weighted Indices.
The Bloomberg Barclays MSCI High Yield SRI Indices were “designed to exclude issuers with substantial revenue derived from sources such as adult entertainment, alcohol, gambling, tobacco, controversial military weapons, civilian firearms, nuclear power, and genetically modified organisms,” Bloomberg and MSCI said.
The Bloomberg Barclays MSCI High Yield Sustainability Indices, meanwhile, were designed to include issuers with higher MSCI ESG Ratings and the Bloomberg Barclays MSCI High Yield ESG Weighted Indices were designed to use MSCI ESG Ratings to adjust issuer market weights, the companies said.
The Bloomberg Barclays MSCI ESG Fixed Income Index suite, which includes a variety of investment-grade, aggregate, corporate index and now multi-currency, high-yield benchmarks, is available for investors via the Bloomberg Terminal.
New Index Provider Introduces Its First Index ETF
New index provider Armor Index launched the Armor US Equity Index ETF (ARMR) in conjunction with Exchange Traded Concepts, which is serving as the exchange-traded fund’s advisor.
The new ETF, the Atlanta-based firm’s first product since being founded in 2019, has a net expense ratio of 0.60% and is trading on the New York Stock Exchange Arca.
Armor Index is positioning itself as a provider of indexes that it said are “designed to protect against downside risk across a number of asset classes.” With ARMR, the firm is looking to “provide investment returns that, before fees and expenses, correspond generally to the total return performance” of its own Armor US Equity Index, it said.
Rebalanced monthly, the index provides exposure to those sectors of the U.S. economy that the firm said “score the highest using Armor’s proprietary market performance indicator,” which identifies the sectors “best positioned to offer strong, long-term performance potential with lower expected downside risk.”