By Randy Myers
Target-date funds have become a cornerstone of retirement savings plans, helping participants build wealth while reducing the risk of making poor investment decisions. Now, asset managers are looking to improve these funds by infusing them with retirement income solutions, private assets, more personalized investment strategies, and new ways of leveraging stable value.
Whether those innovations gain widespread acceptance will depend on their ability to improve participant outcomes without introducing excessive costs or complexity, according to a panel of industry experts speaking at the 2026 SVIA Fall Forum.
“There’s a desire for these kinds of solutions from employees, and employers want to deliver … them,” said Eitan Gazit, vice president of institutional markets at Prudential. “But … [they’re] not yet readily accessible for most people.”
Gazit was joined on the panel by moderator Yolanda Reyes White, relationship manager at Principal Morley; Jason Kephart, senior principal at Morningstar; Brian Miller, head of multi-asset product management at Vanguard; and Preet Prashar, director of defined contribution intellectual capital teams at Marsh.
A Growing Market
Introduced approximately three decades ago, target-date funds today hold more than $5 trillion in assets and, according to Prashar, have largely performed as designed. He cited Marsh analysis showing that the investment performance of the median 2030 target-date vintage has generally kept investors on track toward an objective of replacing 50% of their final salary in retirement.
Miller added that Vanguard research shows participants investing exclusively in target-date funds have experienced more consistent risk-adjusted outcomes than participants selecting their own investment allocations. They also have been less likely to maintain extreme allocations to equities.
The Retirement Income Challenge
Still, target-date funds haven’t solved every challenge facing the retirement industry, including helping plan participants convert their savings into reliable income after they stop working. While employers and employees have expressed considerable interest in retirement income products, adoption remains limited. Among the obstacles are product complexity, limited understanding of available solutions, and participants’ reluctance to surrender control of their savings.
Gazit suggested that successful solutions should be simple, preserve liquidity where possible, and resemble investment arrangements participants already understand, like target-date funds.
“A lot of solutions [are] coming to market,” he said. “We’ve just got to now meet the customer where they are.”
Miller agreed that there is no single solution appropriate for every retiree, and he emphasized that participant education and engagement are as important as product design.
While the panel broadly agreed that stable value could have a role in retirement income innovation, Prashar observed that most emerging solutions are not incorporating it. He said he’s suggested to some target-date providers that they consider adding an alternative income fund, such as a balanced fund with a guarantee, to their target-date lineups, perhaps calling it something like “Income Fund II” or “Stable Value 2.0.” By anchoring it in the stable value concept and including some other asset classes, the fund could offer guarantees and some potential upside in other markets without requiring annuitization. The objective of such a fund would be to provide participants with predictable and guaranteed retirement income while maintaining liquidity (no annuitization) and the potential for growth in the income base. Such a product could allow sponsors to expand their retirement income offerings without replacing their existing target-date fund series.
Expanding Stable Value’s Role
Another development attracting attention is the emergence of co-manufactured target-date funds, in which recordkeepers partner with asset managers to incorporate their stable value products into target-date portfolios. That arrangement can give asset managers additional distribution while allowing recordkeepers to attract assets to their stable value offerings.
Kephart shared Morningstar data showing that co-manufactured target-date funds held only $22 billion in assets as of August 31, 2026. He also expressed some concern about how well they might serve retirement plan participants, especially in cases where funds replace their entire fixed-income allocation with stable value.
“We certainly think stable value is a very good diversifier, obviously a great way to diversify your interest-rate risk,” he said. “However, putting your entire retirement fund bond portfolio into stable value seems like a bit much.”
Prudential research discussed by Gazit examined how target-date funds designed for near retirees could be enhanced by replacing a portion of the fixed-income allocation with a stable value fund that included a small allocation—10% to 20% of its portfolio—to higher-yielding asset classes such as equities, infrastructure investments, or real estate investment trusts. The aim was to potentially increase returns while maintaining relatively low volatility. In the scenarios studied, the research found that those stable-value enhanced funds produced higher average returns and significantly larger participant balances over 30 years than the same base target-date fund using a more traditional stable value fund. Enhancing target-date funds that way, Gazit said, “improves outcomes. I think it’s something we should be making a push for.”
Private Assets Face Hurdles
Private assets represent another area of industry interest, but actual adoption remains extremely limited. Morningstar data showed that target-date funds allocating more than 10% of their portfolios to private assets had only about $60 million in total assets as of August 2026.
Miller said private assets potentially offer greater diversification and access to investment opportunities unavailable in public markets. While higher fees, liquidity restrictions, lack of portability, and the need for participant education all present challenges, he added, “we think you can [potentially] improve [investor] outcomes by including … private assets” in target-date funds.
Prashar noted that plan sponsors face an increasing number of product innovations and may be reluctant to abandon successful traditional target-date funds until new strategies establish stronger track records. He also expressed concern about provisions that could delay redemptions or otherwise restrict access to assets. Ultimately, he said, broader adoption of private assets in target-date funds will depend on whether those investments deliver better net-of-fee results to investors.
Kephart agreed that providers must demonstrate improved retirement outcomes before private assets gain broad acceptance. He said the marketplace will likely need to see some proof that target-date funds with private assets move investors closer to replacing 100% of their final salary in retirement.
Toward Greater Personalization
The panel discussed the potential for managed accounts and technology to make target-date investing more responsive to individual circumstances.
Miller noted that traditional target-date funds have long faced criticism for their one-size-fits-most approach. Managed accounts can offer greater personalization but generally charge more. To gain wider acceptance, he suggested, they must demonstrate added value. “And it … [can be] hard to prove that out,” he said.
Kephart said hybrid approaches to using managed accounts, in which younger participants initially invest in conventional target-date funds and transition to managed accounts as retirement approaches, may be useful. Personalization becomes particularly valuable around age 50, he said, when a participant’s savings progress, assets outside the plan, and retirement income needs can be assessed more meaningfully. Advances in artificial intelligence and other technologies could eventually make such approaches more accessible and affordable.
For the stable value industry, the emerging landscape offers both opportunities and potential competitive threats. Prashar cited stable value’s established role in some custom target-date funds and the additional distribution opportunities presented by co-manufactured products. However, he warned that new retirement income solutions offering guarantees, liquidity, and market participation could compete directly with traditional stable value products.
Gazit urged stable value providers to pursue new opportunities while retirement income products are still evolving, warning that waiting another decade to introduce new solutions could be too late.