Target Solution Trust
PhilosophyWe believe target-date strategies should reflect the prevailing behavior and risk appetite of the average participant and be consistent with capital market realities. We believe early-career participants warrant high equity allocations in order to maximize wealth accumulation and capitalize on long recovery times if market declines occur. The average participant's risk aversion rises dramatically as retirement approaches when accumulated wealth is the greatest. This calls for risk management that minimizes the probability of large losses near retirement and gives participants the freedom to choose their future path. These beliefs translate into a glide path that reaches its final asset allocation at retirement and employs multiple risk mitigation techniques in the final years.
ProcessWe believe active asset allocation coupled with a disciplined manager selection and monitoring process provides better risk-adjusted return potential than a diversified but unmanaged approach. Short-term volatility is controlled through broad capital market diversification and tactical asset allocation. The asset allocation process reflects our current expectations about future returns, risks and potential market interactions. Active manager selection and monitoring within each asset class provides additional return potential over time and eliminates single manager risk. Passive management complements the actively managed strategies with broad-based market exposures at low cost. Voya Target Solution Trust Series strategies strategically combine proprietary and sub-advised third-party managed strategies by evaluating the risk/return characteristics, relative performance, volatility, and cross correlation of the broad universe of underlying strategies to construct optimal portfolios. Through diversification of alpha sources and investment styles, the portfolios are designed to reduce risk and generate consistent long-term returns.
- Open Architecture. Voya is one of only a few target-date providers to employ nonproprietary managers within our off-the-shelf target-date portfolios. We believe this is consistent with prevailing best practices in the management of defined benefit and defined contribution retirement plans.
- Broad Diversification. We invest in a broad range of traditional and alternative asset classes to provide broad diversification, global market exposure and access to alpha opportunities across capitalizations, styles and regions.
- Participant-Centric Glide Path Approach. We believe the best approach to glide path design is to maximize wealth accumulation early in a participant’s career and have an accelerated reduction of equity in the years immediately before retirement to limit the potential for significant losses.
- Blend of Active and Passive. We utilize a mix of active and passive strategies which allows us to draw on the alpha generating potential of proven institutional asset managers and deliver a robust product at an institutionally attractive fee level.