Press release
AMID MARKET TURMOIL OF 2022, INVESTORS IN TARGET DATE STRATEGIES AGAIN STAY THE COURSE
BALTIMORE, Oct. 24, 2022 /PRNewswire/ -- In the market turbulence of 2022 that has delivered crushing losses in both the stock and bond markets, target date
About this update from T. Rowe Price Group, Inc.
[{"type":"text","content":"BALTIMORE, Oct. 24, 2022 /PRNewswire/ -- In the market turbulence of 2022 that has delivered crushing losses in both the stock and bond markets, target date investors are again an oasis of calm despite sharing the pain in their own portfolios. On the T. Rowe Price 401(k) recordkeeping platform, target date investors continued to steadfastly adhere to a long-term focus and stay the course during market downturns. \nNEWS\nAmong participants on the T. Rowe Price 401(k) recordkeeping platform holding their entire balances in a target date strategy, only 0.2 percent of investors with all of their assets in target dates made any changes to their asset allocation in the rocky second quarter of this year. That compares with 6.4 percent making changes among those not holding any target date strategies, or 32-times the rate of target date investors.\nThis behavior is consistent with past market crises. For example, in the first quarter of 2020 amid the outbreak of the COVID-19 pandemic, only 1.5 % of T. Rowe Price 401(k) recordkeeping participants with their entire balances in a target date portfolio made any investment changes, versus 9.2% of those with no target dates in their accounts.\nIndustrywide, target date solutions have become a mainstay investment for investors saving for retirement by offering globally diversified, professionally managed portfolios that gradually migrate from an equity-heavy allocation early in an investor's time horizon to a more balanced portfolio of equities and bonds. The share of the 401(k) market invested in these portfolios quadrupled to 31% in 2019 versus 8% in 2007, according to the Investment Company Institute.\nOver the last two decades, target date strategies can stake a claim as one of the most important financial innovations in history. Since the 2006 federal Pension Protection Act established target date portfolios as a qualified default option in retirement plans, they have become one of the most popular investment options in 401(k) plans. For example, the number of 401(k) plan participants owning target date strategies has grown from 26% in 2007 to 60% as of the end of 2019, according to the latest figures from the Investment Company Institute.\nThe four original T. Rowe Price Retirement Funds reached their 20th anniversary on September 30, 2022. The T. Rowe Price target date suite, which now ...