Home>Video>Sizing Up 2 Passive Target-Date Fund Series

Sizing Up 2 Passive Target-Date Fund Series

Thu, 19 Mar 2015

Although both earn Analyst Ratings of Silver, BlackRock LifePath and Fidelity Freedom differ in their equity glide paths and asset-class allocations.


Video Transcript

Jeff Holt: The BlackRock LifePath Index funds (LIBIX) and the Fidelity Freedom Index funds (FQIFX) are both target-date fund series, both invest in passively managed strategies, and they both earn a Morningstar Analyst Rating of Silver. But there are distinct differences between the two.

One major difference between the two is in the equity glide path. The BlackRock series hits its most conservative equity landing point of 40% in equities at the target date and will continue to hold that much in equities throughout the retirement phase, whereas the Fidelity series will have over 50% in equities at the target date but will continue to become more conservative for another 15 years.

Both these series are considered passive because they invest in index funds, but that does not mean they are investing in the same asset classes. For example BlackRock includes REITs, both international and domestic, as well as international small caps, whereas Fidelity includes commodities and has a higher allocation to cash. For example, the Fidelity Freedom Income (Index) fund (FIKFX) holds as much as 30% of its assets in a money market fund, whereas BlackRock keeps its cash allocation minimal.

While both of these series are solid low-cost options for target-date investors, it's important to be aware of the differences between the two. 

  1. Related Videos
  2. Related Articles
  1. 3 Upgrades for Fidelity Funds

    We recently raised our Analyst Ratings for Fidelity Overseas, Intermediate Bond, and the Freedom Index target-date funds.

  2. Cream of the Crop: Our Favorite Funds in All Flavors

    Morningstar's Russ Kinnel, Sarah Bush, and Christine Benz highlight their top fund picks for domestic and foreign equity, core bond, inflation-protected securities, and much more.

  3. Fidelity Delving Into Private Companies

    In an attempt to see a longer runway for growth, some of the group's largest funds, including widely held Fidelity Contrafund, are investing in private companies.

  4. Consistency Key With 529s

    Fidelity's Andrew Dierdorf discusses how his firm's new open architecture strategies jell with Fidelity's legacy college-savings options.

  5. 2014 Leaders and Laggards in Fidelity's Lineup

    Two thirds of Fidelity's domestic-equity funds have beaten their category averages year to date, but some notable funds, including Contrafund and Low-Priced Stock, have looked more sluggish.

  6. Fidelity's Standout and Up-and-Comer Equity Funds

    Morningstar senior analyst Chris Davis gives a progress report on Fidelity's equity fund enhancement initiatives, notes areas for further improvement, and offers his take on the cream of the crop.

  7. How Fidelity Funds Stacked Up in 2013

    Fidelity's growth-leaning equity funds and more conservative bond funds made for a strong year for the fund firm, says Morningstar analyst Katie Reichart.

  8. Checking the Scorecard on Fidelity Funds

    Morningstar senior fund analyst Christopher Davis sizes up performance and stewardship at the fund family and discusses some of his favorite Fidelity funds.

©2017 Morningstar Advisor. All right reserved.