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Folio Investing Celebrates Its Target Date Folios' Five-Year Record Of Outperformance

MCLEAN, Va., Jan. 24, 2013 /PRNewswire/ -- Folio Investing announced today that, over the five years since they were brought to market in December 2007, its Target Date Folios have significantly outperformed traditional target-date funds. The Folios have provided both higher returns and lower volatility than the competing funds during this tumultuous period.


Target Date Folios, like target-date funds, are designed for investors planning and saving for retirement.  A 2025 Target Date Folio, for example, is for investors who expect to retire in 2025. 

"The performance of our Target Date Folios over the past five years proves that improved design and better diversification actually do provide tremendous value.  For many though, traditional target-date funds are the only available target-date choice in their retirement plans.  But, investors deserve better.   That's why we believe it is important to join with a distribution partner who can bring Target Date Folios to a much broader base of investors," said Steven Wallman, Founder and CEO of Folio, and a former Commissioner of the U.S. Securities and Exchange Commission.  "Target Date Folios can be offered not only as 'Folios', which are unique to the Folio Investing platform, but broadly as collective investment trusts and mutual funds," Wallman said.

The Target Date Folios' outperformance is due to a number of design initiatives pioneered and proven valuable by Folio Investing. 

  • A Broader, More Robust Diversification Strategy.  Many target-date funds' returns are, effectively, simply a blend of a U.S. bond index and a U.S. equity index fund, such as the S&P500.  When the stock market is especially volatile though, such a portfolio is also still volatile.  Target Date Folios are far more diversified, including not just U.S. stocks and bonds, but also commodities, REITs, Treasury Inflation Protected Securities (TIPS) and other asset classes.  Theoretically, the result should be lower volatility and higher returns at any given risk level.  And, that's what Folio Investing's Target Date Folios have proven over the last five years. 
  • Greater Choice and Customization.  Target Date Folios come in conservative, moderate and aggressive risk levels for each target year, and uniquely can be further customized by investors or advisors as they see fit.  That allows the Target Date Folios to be a much better match to an investor's needs than can be provided by any "one-size-fits-all" fund.
  • Intelligent Risk Targeting, Not Simple Asset Allocation.  Target Date Folios target specific risk levels over time.  By contrast, target-date funds traditionally target specific asset allocations over time.  But when market conditions change adversely, clinging to defined asset allocations means investors are exposed to far more risk than expected.  Target Date Folios, instead, use a changing asset allocation as the means to achieving targeted risk levels, as opposed to the asset allocation being the end itself.  

The Target Date Folios' five-year track record proves the power of these innovations in design. While mitigating risk, the Folios generated higher returns than their target-date fund counterparts. 

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