Fidelity Freedom Index Series

The Fidelity Freedom Index target-date series offers a simplified, cheaper version of the firm’s best thinking around retirement using well-managed index funds. All share classes earn a Morningstar Analyst Rating of Silver.

A prudent approach to glide path construction is a hallmark of Fidelity’s target-date funds. The team’s three glide path changes in the 2010s demonstrated it will make sound, research-driven enhancements that improve the series’ diversification and resiliency across market environments. In July 2021, the team implemented additional changes to the fixed-income portfolio to achieve the same effect. Changes included roughly doubling the allocation to Treasury Inflation-Protected Securities and splitting the exposure into short-term and long-term sleeves. International sovereign bonds also entered the asset mix after joining Fidelity’s active target-date series several years prior based on the team’s constructive view of the asset class.

A trio of managers oversees this offering with one of the largest multi-asset research engines in the industry. Finola McGuire Foley joined the team in June 2018 and now oversees most of the group’s multi-asset index offerings. Andrew Dierdorf and Brett Sumsion both bring a wealth of experience, including their tenures on this series since 2009 and 2014, respectively. The managers receive support from Fidelity’s well-resourced global asset-allocation team of more than 60 investment professionals. The group’s CIO Bill Irving has also made positive changes to strengthen the team since his promotion in May 2020, including further alignment of compensation with investor outcomes.

This series taps only passive index funds, which contributes to its lower costs. But the approach can also limit the series’ ability to differentiate from similarly contoured but more nimbly constructed target-date offerings. For example, management does not make tactical allocation calls to enhance shorter-term returns, unlike its siblings that use actively managed strategies. Despite these limitations, the series has delivered decent long-term results. Over the trailing 10 years through December 2022, nine out of 12 vintages’ investor share class produced above-average alpha within their respective Morningstar Categories.

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