Fidelity dialing up international exposure across target date funds

Fidelity Investments is modifying its $90 billion Freedom Funds lineup of target date funds to increase their exposure to international equities, while also adding commodities and Treasury inflation-protected securities into the mix.

The new allocation will dial up the Freedom Funds’ target exposure to international equity funds, as a percentage of the total target exposure to equity funds, to 30% from 20%, Fidelity said in a statement.

The move will result in a reduction in allocation to domestic equities in these target date funds — which have roughly 5 million shareholders.

“Today, non-U.S. markets account for greater than half the exposure of the aggregate world equity market capitalization,” Derek Young, chief investment officer for the global asset allocation group for FMR Co., parent company of Fidelity, said in the statement. “We also have seen diminished risks in long-term overseas investing.”

In addition the funds will add two new underlying funds, the Fidelity Series Commodity Strategy Fund and the Fidelity Series Inflation-Protected Bond Index Fund, to seek further diversification with exposure to commodities and TIPS. Commodities and TIPS can also reduce risk and protect against inflation, the firm noted in the statement.

Fidelity had more than $2.9 trillion in assets under administration, including managed assets of $1.4 trillion, as of Aug. 31.

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