Target Date Funds Now Available

Oct. 31, 2020

Earlier this month, Portico replaced its Select Series 40e, 60e, and 80e balanced funds with industry-standard target date funds — both social purpose and unscreened options. This is the most significant update to the plan’s fund lineup in 18 years, an important move that gives ELCA retirement plan members access to funds that maintain an age-appropriate asset mix over time.

Target date funds have become a popular choice in employer-sponsored retirement plans over the past decade, with total assets invested in target date strategies reaching $2.3 trillion at the end of 2019.1According to a recent study, 93.3% of defined contribution plans offer target date funds, and 87.3% plans offer these funds as the default investment.2

For many investors, simplicity is part of their appeal. Like balanced funds, target date funds offer diversification but go a step further, employing a “glide path” that systematically adjusts the asset mix over time to keep members invested age-appropriately.

Portico target date funds were customized specifically for the ELCA retirement plans to create as much investment continuity as possible, minimize costs, and preserve a choice of social purpose and unscreened options. To minimize disruption, the new funds use the same investment managers and underlying investment pools, which include public equities, fixed income, real assets, and private equity.

“We offer 15 social purpose funds, including 11 target date fund social purpose options,” said David Quello, Portico’s chief investment officer. “Our commitment to social purpose investing in the ELCA is long-standing, dating back to the 1980s. We took extra steps to ensure that members can use target date funds, with and without social purpose investing.” New members who join the plan after Oct. 1, 2020, will be defaulted into the social purpose target date funds.

To complete this transition, balanced fund money transferred to the target date fund corresponding to a member’s 65th birthday. With more than 4 out of 5 members invested in balanced funds, and nearly half of them fully invested in the default 60e fund, this change affected most retirement plan members.

As always, members can choose to invest in any of the plan’s fund options and move their account assets on any normal business day. Those who wish to invest only a portion of their account in target date funds, or to build their own portfolio, can choose from a variety of social purpose and unscreened funds that span a broad range of asset classes.

The Investment Fund Descriptions document contains important details about Portico funds, including information about their target asset allocations, investment objectives, risk and return characteristics, and fees and expenses. Plan members can obtain a copy of this document on myPortico or by calling the Portico Customer Care Center at 800.352.2876.

1 Source: Morningstar 2020 Target-Date Strategy Landscape Report
Source: Callan Institute 2020 Defined Contribution Trends Survey