“One of the key features to the way we manage these types of funds is active asset allocation,” Cunningham added. “Many lifecycle funds, whether they are funds of funds or regardless, will stick to a specific glide path. We do not have glide paths, we have a glide range.”
“[Asset managers] do have ranges for each asset class,” Bridget Bearden, research analyst at Strategic Insight, said in the article. “In 2008 the practice of rigid rebalancing back to a certain strategic asset allocation resulted in poor returns because the markets kept going down.”
In contrast, Manning & Napier’s target glide range “denotes a higher level of flexibility,” Bearden added.
ETFs help the asset managers achieve the higher flexibility.
“There is enough liquidity and variety [in the ETF market]and you can trade them very, very efficiently at a low cost,” Cunningham said.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.