Managed Accounts Under Adverse Market Scenarios
Where and When Personalization Adds Value
Retirement strategies are usually compared on average results, but how they hold up in down markets matters too. This paper uses Morningstar’s Defined Contribution Outcomes Model to compare managed accounts with do-it-yourself portfolios and target-date funds under simulated severely poor market conditions.
The findings suggest that managed accounts can add meaningful value when markets struggle, through both better investment choices and higher savings rate from managed accounts users. For plan sponsors, the results offer a clearer view of how personalization can help shape participant outcomes.
.png?format=webp&auto=webp&disable=upscale)
©Morningstar Investment Management LLC. All Rights Reserved. The Morningstar name and logo are registered marks of Morningstar, Inc. Associated advisory services are provided by Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc.
The information contained in this document is the proprietary material of Morningstar. Reproduction, transcription, or other use, by any means, in whole or in part, without the prior written consent of Morningstar, is prohibited. Opinions expressed are as of the current date; such opinions are subject to change without notice. Morningstar or its subsidiaries shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use.
This commentary is for informational purposes only. The information, data, analyses, and opinions presented herein do not constitute investment advice, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. Please note that references to specific securities or other investment options within this piece should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance does not guarantee future results. This commentary contains certain forward-looking statements. We use words such as “expects”, “anticipates”, “believes”, “estimates”, “forecasts”, and similar expressions to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.
The results presented in this paper are hypothetical. They were generated using the Morningstar Center for Retirement & Policy Studies' Defined Contribution Outcomes Model (DCOM) and do not represent the actual results of any participant, plan, or account. They do not reflect actual trading or the actual performance of any managed-account service, target-date fund, or other investment. Projected outcomes are based on simulated capital-market paths and on assumptions about, among other things, asset-class returns, contribution rates, salary growth, investment horizon, and fees. Results are shown net of an assumed 0.40% annual managed-account fee. The adverse-market scenarios examined are drawn from the model's simulated distribution and are not forecasts of actual future market events. Hypothetical results have inherent limitations, and changes in the model's assumptions or methodology may materially alter the results. Hypothetical results are provided for illustrative purposes only and do not guarantee future results.