Fidelity Broadens Access to Its Target Date Trusts With Alts

Fidelity this week broadened the availability of a target date strategy, the Freedom Plus Commingled Pool, that offers exposure to alternative investments.

Fidelity introduced 14 Freedom Plus collective investment trusts, or CITs, to the broader institutional investor market on Tuesday at a time when plan sponsors are increasingly turning to these products as an investment option, the firm said, citing its recent Plan Sponsor Attitudes Survey.

The strategy previously was managed only for select clients, a spokesperson told ThinkAdvisor by email on Thursday. It applies Fidelity’s target date investment process to a broader opportunity set that can include liquid and illiquid alternatives, the firm said. 

Each Fidelity Freedom Plus portfolio currently includes a 5% strategic allocation in alternatives — specifically direct real estate — in addition to exposures in equities, bonds and short-term building blocks that are similar to other Fidelity Freedom products.

“Fidelity’s investment team will continue to evaluate additional alternative asset classes for inclusion in the portfolios over time,” the spokesperson said.

“Alternative asset classes in a multi-asset portfolio may provide potential benefits, including improved diversification and enhanced risk-adjusted returns,” Andrew Dierdorf, Fidelity Freedom Plus CITs co-portfolio manager, said in a statement Wednesday.

“As interest in alternative investments is growing among plan sponsors and advisors, this offering builds upon Fidelity’s organizational commitment to providing customers with a range of investment choices, including options for clients interested in alternatives.”

Cerulli Associates reported this week that CITs continue to erode mutual fund dominance in the defined contribution retirement market. CITs have outpaced mutual funds in asset growth since 2018 as DC plan sponsors and intermediaries value the vehicle’s cost advantages, according to the research firm.

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