Adding alternative assets to target-date funds has the potential to improve individuals’ expected retirement income, according to a report from the Georgetown University Center for Retirement Initiatives. The report highlights how the strategic use of alternative assets in target-date funds — which become more conservative as the retirement target date nears — can increase retirement income and lower risk.

The report, titled, The Evolution of Target-Date Funds: Using Alternatives to Improve Retirement Plan Incomes, was produced by the center in conjunction with Willis Towers Watson.

Target-date funds have gained popularity as a defined contribution investment option because of their prudent risk management and simplicity. The underlying asset classes in target-date funds can be broadened to include alternative investment strategies, such as private equity, real estate and hedge funds, to create a “diversified TDF.” Using alternative strategies in a t