Lipper has released a new series of associated benchmark indexes to gauge the performance of lifestyle mutual funds. The lifestyle benchmarks and three target-date counterparts correspond with new investment categories launched earlier this year (FA, 1/16). The lifestyle benchmarks are divided into growth, moderate and conservative categories and the target-date indices start at 2010 and increase at 10-year intervals.
Providing yardsticks to benchmark risk-based and lifestyle funds has become a priority in recent years as plan sponsors have increasingly shifted away from traditional fund categories with established benchmarks, said Jed McKnight, head of North American research at Lipper. “Passive indexes like the Standard & Poor’s 500 index don’t have the same structure as a [lifestyle] mutual fund,” McKnight said. “The takeaway for advisors is if you’re going to benchmark yourself do it against something that’s relevant.”