In recent years, managers of target-date funds have made the argument that target-date funds need to take on added equity exposure and risk to see investors through retirements that could span 30 years or longer.

Then 2008 happened.

Now fund companies are reversing couse and beginning to add risk controls to their target-date funds or to tamp down equity exposure.

AllianceBernstein recently changed the investment mandate of its target-date funds to permit them to include a "volatility management component" that allows the investment team to move 20% of a portfolio from equities and real estate investment trusts into bonds and cash as a shock absorber in the face of an extremely challenging market.

Invesco AIM’s target-date funds have moved from an emphasis on stocks, to bonds and commodities. The funds also now leverage their holdings through futures. The logic, Scott Wolle, manager of the AIM Balanced Rick Retirement Funds, told, is that “by avoiding serious losses in downturns, [the funds] can achieve attractive long-term returns.”

What’s even more interesting is that 10 years before retirement, the funds begin to gradually shift assets into cash, until they reach 40% of total holdings. Likewise, Putnam’s RetirementReady Funds now invest in the company’s new Absolute Return funds, which benchmark against U.S. Treasuries.

On the other hand, the Vantagepoint Milestone Funds now have glidepaths that extend 10 years past the year in each fund’s name to extend a more aggressive asset allocation for the funds. For example the landing point for the Milestone 2010 fund is now 2020. By extending their equity exposure, Vantagepoint’s goal is to protect investors against inflation as well as preserve capital.

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