Morningstar has developed a series of 18 asset allocation indexes for investors and advisers to use as benchmarks for target-date and target-risk funds.
The 13 indexes for target-date funds are included in the Morningstar Lifetime Allocation Index series, and the five indexes for target-risk funds are included in the Morningstar Target Risk Index series. The Lifetime series is available in three risk profiles: aggressive, moderate and conservative.
There is significant variation in asset allocation from one fund family to another for target-date and target-risk funds with the same stated goal, noted Sanjay Arya, director of Morningstar Indexes. One familys 2020 target retirement date fund, for example, can be much more aggressive than anothers. This diversity is positive for investors, because they have different tolerance and capacity for risk. However, this deviation among fund families makes benchmarking their funds more difficult.
Thats why we created a complete family of asset allocation indexes with varying risk levels to help investors and fiduciaries evaluate these funds to find the best fit, Arya continued.