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Joseph Szalay: Personalization is a natural next step for target date funds, and as we introduced in the first episode of this series, myTDF is an innovative model that makes personalized glide paths for individual participants as easy as traditional target date funds.
Text on screen: TITLE – The next evolution in retirement plan design; SUBTITLE – SIMPLE AND EASY
Image on screen: A diagram with a check mark in the middle highlights how myTDF is simple and easy. To the left of the check mark, for plan sponsors, the diagram notes seamless plan integration and implementation. On the right, for participants, the figure explains how there’s no effort in enrollment, with all five data points coming directly from the plan recordkeeper and payroll provider.
Plan sponsors may think offering personalization for a large participant population would be challenging, but in fact it can be relatively simple. It’s also simple for participants because the factors used to customize their portfolios come directly from the plan recordkeeper or payroll provider. So, just like traditional Target Date Funds, myTDF requires no participant engagement.
Image on screen: A figure shows three components of myTDF. On the far left, a circle is labeled “myTDF”, which links to three other circles to its right, arranged as a vertical column. The first of those circles, at the top of the column, highlights PIMCO. To its right are bulleted points: Glide path algorithm, RealPath Blend CITs from PIMCO and Vanguard, and fiduciary 3(38) oversight. The next circle, directly below the PIMCO section, highlights the recordkeeper, with three features listed: managing participant level implementation process, powering participant engagement platform, and integrating with Morningstar. The final circle, at the bottom, is labeled “Morningstar,” with bulleted items calling attention to how the technology platform houses glide paths, maps participant data stored at the record keeper, and that PIMCO doesn’t receive personal data.
All the hard work is done behind the scenes by PIMCO and our partners.
We’ve initially selected Morningstar to house PIMCO’s proprietary glidepath model and map participant data stored at the plan Recordkeeper or payroll provider. This allows us to provide personalized portfolios without PIMCO receiving any personally identifiable information directly.
Image on screen: A diagram uses a flow chart to show how myTDF works in practice. At the top, above a horizontal row of boxes, a box notes how PIMCO provides the algorithm output containing an extensive set of glide path allocations and portfolio mappings to Morningstar (i.e. the myTDF engine). This box points downward to the second of the three horizontally arranged boxes. The second box notes how Morningstar processes the inputs through the myTDF engine to output the optimal allocation and portfolio mapping for each participant. The box has an arrow pointing to the next box to the right, which notes that the recordkeeper executes the allocations. This box, which is furthest to the right, has an arrow circling back to a box on the far left, which notes how the recordkeeper sends key participant inputs. This box in turn points to the second box, the one discussing Morningstar turning inputs into allocations, completing the circle.
So, how does this work in practice?
Image on screen: The video zooms in on the far left-hand box on the flow chart that shows how myTDF works in practice. This box notes how the recordkeeper sends key participant inputs. Below the box, the inputs are listed as follows: age, salary, account balance, employer contribution rate, and employee deferral rate.
First: After a participant enrolls or is defaulted into myTDF, the recordkeeper securely sends their data to Morningstar. This may include their date of birth, salary, retirement account balance, as well as the participant’s savings and company match rates.
Image on screen: The video zooms in on the second column of the flow chart that shows how myTDF works in practice. This includes the top box, which notes that PIMCO provides the algorithm output containing an extensive set of glide path allocations and portfolio mappings to Morningstar (i.e. the myTDF engine). This box has an arrow below it pointing down to a box that highlights how Morningstar processes the inputs through the myTDF engine to output the optimal allocation and portfolio mapping for each participant. The hypothetical allocation, shown as a pie chart.
Second: Morningstar runs the participant’s data through PIMCO’s proprietary glidepath model, which generates an asset allocation that is personalized for the participant. This information is then securely sent back to the recordkeeper.
Image on screen: The video zooms in on a portion of the previously described horizontal flow chart that shows how myTDF works in practice. The highlight is of a box on the far right of the flow chart, which notes that the recordkeeper executes the allocations. The video then zooms back out to the main diagram of the flow chart. The text “Process repeats quarterly or any time an employee joins/leaves the plan” appears below the diagram.
Then lastly, recordkeeper executes the trades to implement the participant’s personalized portfolio.
This process is repeated on a quarterly basis to ensure any changes, such as a pay increase or balance change, are automatically captured and considered in the participant’s allocation over time.
Image on screen: With a view of the horizontal flow chart that shows how myTDF works in practice, the video zooms in on the second box from the right of the flow chart, which notes how allocations are mapped to combinations of existing PIMCO RealPath Blend Collective Investment Trusts.
Now, what are the actual investments being used to build participant portfolios?
We use PIMCO’s RealPath Blend target date collective investment trusts as the building blocks for myTDF, combining different vintages to implement the personalized glide path.
Text on screen: TITLE – Vintage blending:
Image on screen: The video shows a graphic resembling a chart with five side-by-side bars, made up of stocks and bonds, labeled 2060, 2045, 2040, 2030, income, which combine into one bar. Bulleted text then appears to the right listing the asset classes: U.S. Fixed income, Global bonds, Long treasuries, Long TIPS, TIPS, Emerging market bonds, High yield, Commodities, Real estate, Non-U.S. stocks, U.S. small cap stocks, U.S. large cap stocks, Emerging market stocks. Additional bulleted text appears to the right explaining how MyTDF builds a more precise glidepath, that there’s no need to change the core menus, and how it follows a similar benchmarking process.
We call it vintage blending. Why is this important?
By using RealPath Blend Target Date CITs, we can access asset classes that may not be available on the plan’s investment menu. That allows us to build a more precise glidepath for each participant. Plus, plan sponsors don’t need to change their core menus to accommodate myTDF.
In addition, benchmarking is simple. Plan sponsors who are familiar with traditional TDFs can follow a similar benchmarking process for myTDF.
Target date funds have deservedly become the QDIA of choice for many plan sponsor’s due to their simplicity and potential to cater to a broad group of participants. myTDF offers a more personalized approach to target date funds, while still preserving the simplicity that has made them so popular today.
Text on screen: For more insights and information, visit pimco.com
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Disclosure
PIMCO and myTDF® are trademarks of Allianz Asset Management of America LLC in the United States and throughout the world.
myTDF® is a model designed by Pacific Investment Management Company LLC (“PIMCO”), a registered investment adviser, and is intended for citizens and legal residents of the United States and its territories. Investment advice generated by myTDF® is provided by the relevant plan fiduciary implementing myTDF® based on information available, and it is limited to the investment options available in the applicable defined contribution or defined benefit plan. Projections and other information regarding the likelihood of various retirement income and/or investment outcomes are hypothetical in nature, do not reflect actual results, and are not guarantees of future results. Results may vary with each use and over time. myTDF® may be covered by one or more U.S. or international patents.
myTDF® is used by plan fiduciaries to provide a defined contribution or defined benefit plan solution that allows a plan participant to personalize their target date fund allocation across multiple target date vintages based on participant inputs.
Except with respect to PIMCO myTDF®, PIMCO does not have any investment advisory or fiduciary relationship with plans or plan participants who access myTDF® through third party fiduciaries, and any statement or representation to the contrary is false.
Except with respect to PIMCO myTDF®, neither PIMCO nor any affiliate is providing any individualized fiduciary recommendations in connection with myTDF®. PIMCO is not undertaking to act as a fiduciary, as defined in Section 3(21) of ERISA or Section 4975(e)(3) of the Code, to any plan or plan participant No communication by PIMCO or any affiliate will be based on a review of any plan or plan participant’sparticular needs or individual circumstances or will reflect the application of professional or expert judgment.
PIMCO is not affiliated with any myTDF® third party fiduciary or recordkeeper. No communication by PIMCO or any affiliate should be construed as a recommendation regarding whether a plan should use a particular myTDF® third party fiduciary or recordkeeper.
Glide Path is the asset allocation within a Target Date Strategy (also known as a Lifecycle or Target Maturity strategy) that adjusts over time as the participant’s age increases and their time horizon to retirement shortens. The basis of the Glide Path is to reduce the portfolio risk as the participant’s time horizon decreases. Typically, younger participants with a longer time horizon to retirement have sufficient time to recover from market losses, their investment risk level is higher, and they are able to make larger contributions (depending on various factors such as salary, savings, account balance, etc.). Generally, older participants and eligible retirees have shorter time horizons to retirement and their investment risk level declines as preserving income wealth becomes more important.
Target date funds are designed to provide investors with a retirement solution tailored to the time when they expect to retire or plan to start withdrawing money (the "target date"). Target date funds will gradually shift their emphasis from more aggressive investments to more conservative ones based on their target dates. Target date funds invest in other funds and instruments based on a long-term asset allocation glide path developed by PIMCO, and performance is subject to underlying investment weightings, which will change over time. An investment in a target date fund does not eliminate the need for an investor to determine whether a Fund is appropriate for his or her financial situation. An investment in a fund is not guaranteed. Investors may experience losses, including losses near, at, or after the target date, and there is no guarantee that a fund will provide adequate income at and through retirement.
Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Diversification does not ensure against loss.
There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market.
Low effort enrollment means that no engagement is required on behalf of the participant when myTDF is implemented in the QDIA offered by a plan fiduciary, and auto-enrollment is utilized.
PIMCO is not responsible for determining the suitability or appropriateness of myTDF® or any securities for any of your plan participants.
PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America LLC. in the United States and throughout the world. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2025, PIMCO
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