The Voya Target Retirement Funds are specifically designed to optimize investment performance by adapting to the evolving risk profiles of investors as they approach retirement. This strategic approach aims to ensure that the funds not only meet but exceed their composite benchmark over the long term, thereby maximizing the likelihood of a successful retirement outcome for participants. The fund's ability to tactically shift asset allocations is central to achieving this objective, allowing it to navigate market conditions effectively and capitalize on opportunities while mitigating risks.
During the third quarter of 2025, global markets experienced a significant upward trend, driven by several key factors. Strong corporate earnings reported in the United States played a crucial role, boosting investor confidence and attracting capital. Concurrently, an wave of optimism surrounding advancements in artificial intelligence further fueled market enthusiasm, particularly benefiting technology and growth-oriented sectors. Moreover, policy adjustments by the U.S. Federal Reserve, including anticipated interest rate cuts, contributed to a favorable investment climate. In this environment, smaller capitalization stocks and growth stocks demonstrated particularly robust performance, leading the overall market rally.
In this dynamic market landscape, the Voya Target Retirement Funds delivered positive returns on both an absolute and relative basis, before the deduction of fees. This indicates that the fund's investment strategies were effective in generating capital appreciation and outperforming its strategic allocation benchmarks. However, after accounting for management and other operational fees, the funds underperformed their benchmarks on a net-of-fees basis. This highlights the impact of expenses on overall returns and underscores the importance of considering both gross and net performance when evaluating investment vehicles. Concurrently, the economic backdrop showed signs of stabilization, with a notable moderation in inflation. The core Personal Consumption Expenditures Price Index (PCE), a key measure of inflation, demonstrated a significant decline from its peak of 5.6% in 2022, settling at a more manageable 12-month average of 2.8%. This easing inflationary pressure provides a more stable economic environment for investors.
The proactive management of retirement funds, coupled with a keen awareness of both market dynamics and the impact of fees, is essential for securing a stable financial future. By continuously monitoring economic indicators and adapting investment strategies, such funds can enhance their capacity to deliver consistent and positive outcomes for those planning for their retirement.
