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Table of contents
- Consensus Recommendation
- Morgan Stanley Turns Neutral On Roku After Stock's 25% Year-To-Date Decline
- Morgan Stanley Turns Neutral On Roku After Stock's 25% Year-To-Date Decline
Consensus Recommendation
Doing so is easy, but it carries a downside: Since the mix of holdings in balanced portfolios is static, investors can find themselves overexposed to risk if they do not monitor and adjust their investments periodically. However, for investors who would rather not reassess and tweak their portfolios every year, target date portfolios may be a more effective way to invest.
These portfolios take into account the year in which you plan to retire and reduce your exposure to riskier investments as you near that date, helping to limit the chance that a market shock wipes out a substantial portion of your portfolio as you're getting ready to cash out. Unlike balanced portfolios, which are static, target date portfolios adjust equity and fixed income exposure continually during the life of the investment, using the investor's distance from retirement as a guidepost.
Instead of making the adjustments every year manually, and perhaps making some prudent or imprudent tweaks, a target date portfolio will change the mix gradually and automatically, seeking to optimize holdings throughout the life of the investment. There are several factors within target date portfolios to consider. Portfolios are made up of underlying funds and those funds can be either actively managed or passive funds, such as ETFs, or a combination of both.
Target date portfolios can also be open or closed architecture. Meaning, some managers stock their target date portfolios with only their own proprietary products closed , while others, Morgan Stanley included, have no such restrictions open. One of the biggest benefits of a target date portfolio may be how they handle one of the biggest risks to a retirement portfolio, the sequence of returns. In scenario one, there's a decade of poor market performance the s , followed by 20 years of good market performance s and s and then a decade of terrible market returns s.
Scenario two assumes a different order of events: The worst returns happen during the first decade, followed by s-like returns the following decade, and ending with the best returns during the last two decades.
Morgan Stanley Turns Neutral On Roku After Stock's 25% Year-To-Date Decline
In a balanced portfolio the difference in the final portfolio value could vary vastly from scenario one, where the worst performance happens later in the investment period, to scenario two, where it happens early on. On the other hand, the final portfolio value of a target date fund may be considerably less affected from one scenario to the other. While all target date portfolios manage sequence of returns risk to some extent, Morgan Stanley looks at current and projected market conditions as well, drawing on analysis from the Morgan Stanley Global Investment Committee.
If the committee forecasts a rough upcoming two to three years, the target date portfolio can pull back slightly on equity exposure. Here's a quick guide for how to read an earnings report. Enter up to 25 symbols separated by commas or spaces in the text box below.
Morgan Stanley Turns Neutral On Roku After Stock's 25% Year-To-Date Decline
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