Adequate savings, not being overly conservative and effective diversification are three of the recommendations AllianceBernstein makes in its new report, "Target-Date Retirement Funds: A Blueprint for Effective Portfolio Construction."
AllianceBernstein also found that substantial equity allocations, and active management of the asset classes within a fund are crucial for effective portfolio construction.
Thomas J. Fontaine, senior portfolio manager of core/blend services at Alliance, prepared the report, which is geared at helping plan sponsors and their consultants help plan participants make good investment choice, while at the same time increase participants' financial security upon retirement.
"With millions of Americans now depending on their defined-contribution plans for retirement savings, our industry needs to provide simple but effective investment solutions," Fontaine said. "The goal of our research is to help elevate the quality of target-date retirement fund offerings. As our research shows, effective portfolio construction can help add years of retirement income for participants, not just enough to live on, but enough to live well on throughout retirement."