MassMutual RetireSMART(SM) Target Date Funds Introduce New Glide Paths Subadvised By J.P. Morgan Asset Management(1)
New custom glide paths are built by J.P. Morgan, the only active TDF manager to achieve a Morningstar Gold rating(2)
17 Sep, 2018, 09:30 ET
SPRINGFIELD, Mass., Sept. 17, 2018 /PRNewswire/ -- The MassMutual RetireSMARTSM Target Date Funds, available through 401(k)s and other defined contribution retirement plans offered by Massachusetts Mutual Life Insurance Co. (MassMutual), now offer enhanced glide paths subadvised by J.P. Morgan Asset Management Inc. (J.P. Morgan). The fund family will now be called the MassMutual RetireSMART by J.P. Morgan Target Date Funds.
The new glide paths are available within the 12 MassMutual RetireSMART TDFs, ranging from the In Retirement Fund to the 2060 Fund. The MassMutual RetireSMART Target Risk Funds are not being subadvised by J.P. Morgan.
"MassMutual is pleased to introduce our 'next generation' glide paths from J.P. Morgan to meet the investment needs of our retirement savers, no matter where they are on their journey to or in retirement," said Tina Wilson, Head of MassMutual's Investment Solutions Innovation. "Our new glide paths are more sensitive to balancing investment risk and investors' goals, especially as retirement savers approach and enter retirement."
"MassMutual has an in depth knowledge and understanding of the issues retirees face and we're excited to build an integrated solution alongside them to solve for those issues," said Anne Lester, Head of Retirement Solutions for J.P. Morgan Asset Management. "We look forward to delivering a custom solution that maximizes the outcomes for target date fund holders through MassMutual's RetireSMART by J.P. Morgan Target Date Funds."
Glide Path Principles
As the subadviser, J.P. Morgan will create a glide path using its industry recognized long-term capital market assumptions and MassMutual participant data. J.P. Morgan employs four main principles to managing glide paths:
- Defining success as maximizing the number of retirement savers who attain an adequate level of income replacement at retirement;
- Designing glide paths to withstand the stresses of real-life saving and withdrawal patterns;
- Dynamically managing the multi-faceted risks of defined contribution investing, balancing the need to minimize risk and maximize returns; and
- Employing a well-diversified glide path allocation strategy.
In addition, J.P. Morgan will provide tactical asset allocation expertise to take advantage of short- to intermediate-term opportunities.
J.P. Morgan and other asset managers are increasingly focusing on the asset allocation strategies within glide paths, especially as retirement savers approach and enter retirement, according to Wilson. Many pre-retirees and retirees are unaware of the market risks they face and often expose themselves to too much or too little risk, she said, pointing to MassMutual's proprietary research and experience as a retirement plan recordkeeper.
The MassMutual Retirement Savings Risk Study3 recently found that 94 percent of pre-retirees and 92 percent of retirees "strongly agree" or "somewhat agree" that it is important to take steps to avoid major stock market losses right before retirement. One in two pre-retirees (49 percent) and one in three retirees (32 percent) are apprehensive about taking too much investment risk, the study found.
Meanwhile, the study found that 59 percent of pre-retirees and 32 percent of retirees describe their primary investment strategy as focused on either "aggressive growth" or "moderate growth," an indication that many pre-retirees and retirees may be taking more risk than they realize, according to Wilson.
Glide path construction is a critical factor in helping retirement investors manage risks, and J.P. Morgan has a focus on constructing and managing a glide path that accounts for the many risks participants face leading up to and in retirement.
The MassMutual RetireSMART Funds, which have $2.43 billion in retirement assets under management as of June 30, 2018, feature a multi-manager approach and highlight the benefits of active management.
J.P. Morgan is a leader in the target date fund space and the only active TDF manager to achieve a Morningstar Gold rating2, with the J.P. Morgan SmartRetirement team led by fund manager Anne Lester receiving the 2014 Morningstar U.S. Fund Manager of the Year Award in the Allocation category4. J.P. Morgan's target date series has amassed over $100 billion in assets under management over the past decade, and the firm also pioneered target date fund evaluation through its Target Date CompassSM tool, which advisors across the country routinely access for custom, provider-agnostic target date evaluations.
"MassMutual's new glide paths managed by J.P. Morgan are available later this month to both existing MassMutual RetireSMART TDF investors as well as new investors whose employers select our TDF family," Wilson said. "The new glide paths are the latest innovation from MassMutual to help our customers secure their financial futures and protect the ones they love."
About J.P. Morgan Asset Management – Retirement Solutions
J.P. Morgan Retirement, part of J.P. Morgan Asset Management, is a leading provider of comprehensive retirement solutions and is dedicated to improving individual retirement outcomes. The group has defined contribution assets under management of more than $200 billion, as of June 30, 2018.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of $2.0 trillion (as of June 30, 2018), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.6 trillion (as of June 30, 2018) and operations worldwide. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long term care insurance, annuities, retirement plans and other employee benefits. For more information, visit www.massmutual.com.
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1MassMutual has hired J.P. Morgan Investment Management Inc. as subaviser to the funds. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and J.P. Morgan Asset Management.
Investors should consider an investment option's objectives, risks, fees, and expenses carefully before investing. This and other information can be found in the applicable prospectuses or summary prospectuses, which are available from MassMutual by visiting www.MassMutual.com/funds. Please read them carefully before investing.
Generally target retirement date (lifecycle) investment options are designed to be held beyond the presumed retirement date to offer a continuing investment option for the investor in retirement. The year in the investment option name refers to the approximate year an investor in the option would plan to retire and likely would stop making new contributions to the investment option. However, investors may choose a date other than their presumed retirement date to be more conservative or aggressive depending on their own risk tolerance. Target retirement date (lifecycle) investment options are designed for participants who plan to withdraw the value of their accounts gradually after retirement. Each of these options follows its own asset allocation path ("glide path") to progressively reduce its equity exposure and become more conservative over time. Options may not reach their most conservative allocation until after their target date. Others may reach their most conservative allocation in their target date year. Investors should consider their own personal risk tolerance, circumstances and financial situation. These options should not be selected solely on a single factor such as age or retirement date. Please consult the prospectus (if applicable) pertaining to the options to determine if their glide path is consistent with your long-term financial plan. Target retirement date investment options' stated asset allocation may be subject to change. Investments in these options are not guaranteed and you may experience losses, including losses near, at, or after the target date. Additionally, there is no guarantee that the options will provide adequate income at and through retirement and may experience loss of principal near at or after target date.
2Source: Morningstar. Analyst rating as of 2/1/18 applies to the actively-managed SmartRetirement Funds.
The Morningstar Analyst Rating is not a credit or risk rating. It is a subjective evaluation performed by the manager research analysts of Morningstar. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price. Analysts use this five pillar evaluation to determine how they believe funds are likely to perform over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weighting of each pillar may vary. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflect an Analyst's conviction in a fund's prospects for outperformance. A Morningstar Analyst Rating of Gold may be given to a fund with one star or assign a Negative rating to a five-star fund. Analyst Ratings are continuously monitored and reevaluated at least every 14 months. For more detailed information about Morningstar's Analyst Rating, including its methodology, please go to http://corporate1.morningstar.com/Documents/UK/Landing/Morningstars-Two-Ratings-For-Assessing-A-Fund/
The Morningstar Analyst Rating should not be used as the sole basis in evaluating a mutual fund. Morningstar Analyst Ratings involve unknown risks and uncertainties which may cause Morningstar's expectations not to occur or to differ significantly from what we expected.
3MassMutual Retirement Savings Risk Study, March 2018, https://www.massmutual.com/-/media/Files/MM%20Risk%20Study%20Report.pdf
4Morningstar® Awards 2014. Morningstar, Inc. All rights reserved. The 2014 U.S. Allocation Fund Manager of the Year was awarded to the SmartRetirement team for the management of the JPMorgan SmartRetirement Target Date Series (Institutional shares). Subsequent winners in the Allocation category were not target date funds.
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