April, 2015 – InvestorLiterature.com Review
This is an update of the 2013(11) Review which noted concern over the asset mix of a type of defined contribution fund – target date funds. These offer an asset mix which automatically increases in fixed income weight as the member approaches retirement. Since that Review, bond yields have fallen about 1%, resulting in the lowest rates in the history of the Canadian bond market as far as I am aware. In this review we discuss how low rates are and how duration and future returns may be affected, comment on the longevity of retirees, and discuss alternatives that DC plan sponsors can offer to their plan members in this environment.