Voya Investment Management Finds Two-Thirds of Plan Participants Prefer Target Date Funds that Offer a Mix of Active and Passive Managers
NEW YORK, Feb. 2, 2016 /PRNewswire/ -- Voya Investment Management, the asset management business of Voya Financial, Inc. (NYSE: VOYA), today announced the findings of its third survey of participant preferences in target date funds (TDFs). One of the key findings was that two-thirds of respondents reported they prefer TDFs that offer a mix of both active and passive managers for enhanced diversification. Fewer than 25 percent preferred all active, while only one in seven preferred all passive. In addition, the survey found most participants prefer multi-manager TDFs with a mix of both proprietary and nonproprietary funds.
The goal of the survey, "Participant Preferences in Target Date Funds: Fresh Insights," was to track how investor views have evolved in relation to TDFs as they have become more conventional investment products for qualified defined contribution plans.
A white paper with the full results of the survey can be found here.
Among the survey's other key findings are:
- More than 75 percent of TDF users felt using TDFs alleviated the stress of retirement planning and reported increased confidence that they were making good investment decisions.
- Sixty-three percent of TDF users, up 10% from 2011, felt confident they would meet their retirement goals versus 48 percent of non-users.
- Forty-two percent of respondents chose to invest in target dates because of their simplicity, while 32 percent said that performance was the primary criterion.
- TDF users report contributing more to their accounts than non-users, a median of two percent more of income.
- Diversification is key: Both users (91 percent) and non-users (67 percent) showed a strong preference for TDFs that incorporate a broad range of asset classes. Eighty-six percent of users expressed interest in TDFs managed by multiple investment advisors to take advantage of their specific expertise.
- Interest in TDFs is linked to generations—Millennials show the highest level of interest followed by Generation X and then Baby Boomers. Women and younger employees reported less confidence in meeting their retirement goals than older or male participants.
"Overall, we found investors value the diversity. Through a combination of investing in a broad array of asset classes and providing a mix of active and passive approaches to management, target date funds can successfully meet this demand," said Paul Zemsky, chief investment officer, Multi Asset Strategies and Solutions. "What we found was that many participants use other funds to diversify their holdings away from a TDF, in other words, to avoid putting all their eggs into one basket. What they might not realize is that TDFs already contain many baskets, which help accomplish this goal."
What's more, the survey found a strong interest in auto features, with 76 percent of TDF users believing that auto enrollment into an employer's retirement plan would be helpful. Seventy-two percent also felt that auto escalation would be a benefit.
"A key takeaway for our industry is that we need to increase the level of communication and engagement with plan participants and investors to increase their awareness of the benefits of TDFs," said Jake Tuzza, Voya's head of Intermediary Distribution. "TDFs represent a building block for retirement portfolios. It's our job as asset managers to make sure that financial advisors and plan sponsors have access to these products, and can easily explain their benefits, so they can help their clients save for and meet their retirement goals."
The survey conducted in 2015 represents the third sampling of participant data.
- Voya conducted an online survey about target date funds for use in developing promotional and marketing materials and to serve as a reference point during discussions with plan sponsors and advisors. The study was previously conducted in September of 2011 and September of 2013.
- 1,005 consumers responded to the survey.
- All respondents are currently contributing to an employer-sponsored retirement plan (ESRP), age 25+ and are a primary/joint financial decision maker for their ESRP.
- 502 have Target Date Funds within their ESRP; 503 do not.
- Quotas were set for Target Date Fund Users and Non-Users. Data are weighted on household income, household size, gender, age, employment, marital status, region and Users/Non-Users within the total sample.
- The study was conducted from 9/23/2015-9/29/2015.
All investing involves risks of fluctuating prices and the uncertainties of rates of return and yield inherent in investing. The "target date" is the approximate date when an investor plans to start withdrawing their money. There is no guarantee that any investment option will achieve its stated objective. Principal value fluctuates and there is no guarantee of value at any time, including the target date.
Stocks are more volatile than bonds, and portfolios with a higher concentration of stocks are more likely to experience greater fluctuations in value than portfolios with a higher concentration in bonds.
Foreign stocks and small- and mid-cap stocks may be more volatile than large-cap stocks. Investing in bonds also entails credit risk and interest rate risk. Generally investors with longer timeframes can consider assuming more risk in their investment portfolio.
An investor should consider the investment objectives, risks, charges and expenses of the Fund(s) carefully before investing. For a free copy of the Fund's prospectus, or summary prospectus, which contains this and other information, visit us at www.voyainvestments.com or call (800) 992-0180. Please read all materials carefully before investing.
About Voya Investment Management
A leading, active asset management firm, Voya Investment Management manages, as of September 30, 2015, more than $201 billion for affiliated and external institutions as well as individual investors. With 40 years of history in asset management, Voya Investment Management has the experience and resources to provide clients with investment solutions with an emphasis on equities, fixed income, and multi-asset strategies and solutions. Voya Investment Management was named by Pensions & Investments Magazine as a 2015 Best Place to Work in Money Management. For more information, visit voyainvestments.com. Follow Voya Investment Management on Twitter @VoyaInvestments.
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and protect their savings — to get ready to retire better. Serving the financial needs of approximately 13 million individual and institutional customers in the United States, Voya is a Fortune 500 company that had $11 billion in revenue in 2014.
The company had $450 billion in total assets under management and administration as of September 30, 2015. With a clear mission to make a secure financial future possible — one person, one family, one institution at a time — Voya's vision is to be America's Retirement Company™. The company is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible — Voya has been recognized as one of the World's Most Ethical Companies, by the Ethisphere Institute, and as one of the Top Green Companies in the U.S., by Newsweek magazine. For more information, visit voya.com or view the company's 2014 annual report. Follow Voya Financial on Facebook and Twitter @Voya.
SOURCE Voya Investment Management