Fidelity Freedom Index Series
A thoughtful approach at a low cost makes this a strong choice for target-date investors.
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The Fidelity Freedom Index target-date series’ deep global asset-allocation team, research-driven approach, and attractive price earn all share classes a Morningstar Analyst Rating of Silver.
The team has proved it will make sound, research-driven enhancements through its three glide-path changes in the 2010s that improved the series’ diversification and resiliency across market environments. In July 2021, the team announced and soon began implementing additional changes to the fixed-income portfolio to achieve the same effect. Changes include roughly doubling the allocation to Treasury Inflation-Protected Securities and splitting the exposure into short-term and long-term sleeves. International sovereign bonds also entered the asset mix after joining Fidelity’s active target-date series several years prior based on the team’s constructive view on the asset class.
A trio of managers oversees this retirement offering. Andrew Dierdorf and Brett Sumsion have helmed this series together since 2014, while Finola McGuire Foley rounded out the team in June 2018. This group receives support from Fidelity’s well-resourced global asset-allocation team, which currently sits at more than 60 investment professionals. The group’s CIO Bill Irving has also made positive changes to strengthen the team since his promotion in May 2020, including further alignment of compensation with investor outcomes.
This series only taps passive index funds, which contributes to its lower costs. But the approach can also limit the series’ ability to differentiate from similarly contoured but more nimbly constructed target-date offerings. For example, management does not make tactical allocation or use active strategies to enhance shorter-term returns, unlike its siblings that use actively managed strategies. Despite these limitations, the series has delivered impressive results. Over the five-year period through 2021, each vintage’s investor share class has outpaced its respective S&P Target Date Index benchmark on a risk-adjusted basis (as measured by Sharpe ratio).