The shift from defined benefit to defined contribution pension plans in most developed countries raises serious concerns. It means employees must increasingly rely on their own investment decisions to fund their retirement but typically lack the expertise to make them. In response, the asset management industry has started to offer products that provide solutions for investors’ long-term investment needs.

One key innovation is the development of life cycle, or target date, funds that reduce the exposure to equities over a period leading up to the target date.