Pimco and Invesco Try to Build a Better Retirement Fund

Pimco and Invesco use derivatives to protect target-date offerings
Photograph by Toby Coulson/Gallery Stock

Target-date funds were designed to be a simple choice for retirement savers who don’t want to devise their own investment strategies or adjust them over time. The funds typically hold mostly stocks when an investor is younger, then shift to more conservative assets, such as bonds, as retirement approaches. In the financial meltdown of 2008, when stocks and bonds suffered sharp declines, that recipe didn’t offer much protection. Some target-date funds designed for those close to retirement lost as much as 41 percent that year while the Standard & Poor’s 500-stock index fell about 38 percent, according to Morningstar.

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