New software aims to reduce risk in due date funds

The new software solution aims to bring together the best parts of due date funds and managed accounts in 401(k) plans.

Target Date Solutions on Monday announced the release of Soteria, a technology that combines personalized ways to securely land time-bound funds with personalized managed accounts. TDFs are the most popular default qualified investment alternative for defined contribution plans, while managed accounts are the second most popular.

Ronald Sertz, President of Target Date Solutions, said Soteria’s benefits include better return risk sequence management compared to other QDIAs, a proprietary design with a 16-year history, and cost below 20 basis points, typically less than half of the fees charged for managed accounts.

“Our groundbreaking innovation equips accountants with software that will revolutionize 401(k) investing for both insolvent and self-managed members,” Surtz said in a statement.

Surz has been a leading voice in the pension industry regarding the invisible risks of due date funds, especially when they are near or reach maturity. In 2022, for example, due date funds performed poorly as a result of major market corrections in both equity and fixed income markets.

Soteria is designed to correct potential imbalances by better integrating members’ expected retirement age with their level of risk tolerance, as well as using safe, low-risk investments that are in the member’s risk zone.

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