New York, NY: Investors in the second quarter of 2024 closely watched the inflation outlook and its impact on anticipated Federal Reserve rate cuts. The Fed, adjusting its projections from three rate cuts to one through 2024 during its June meeting, noted that while April saw inflation surpassing the 2% target, May and June showed a softening trend. Treasury yields, initially rising in April before settling back to April levels by quarter-end, contributed to a solid 3.24% gain in U.S. stocks. Non-U.S. equities also saw growth, with emerging markets up 4.99% and developed markets down 0.30%. Interest rates fluctuated, while investment-grade bonds experienced a modest gain of 0.07%.

Fidelity’s target-date strategies saw gains across the board in Q2, reflected in the performance summary. Underlying portfolio managers notably drove the Fund’s results versus composite indexes, though active asset allocation decisions had a detracting effect. U.S. equity managers, investment-grade bond managers, and emerging-markets equity managers were key contributors to the fund’s positive excess return. On the other hand, active asset allocation positioning impacted the fund’s relative return negatively, with underweight U.S. equities and overweight investment-grade bonds being particularly notable.

Looking ahead, the Fund’s strategic asset allocation remains focused on long-term considerations, such as participant needs, diversification, and market trends. Equity investments are seen as a wealth-building asset over time, while fixed-income holdings offer stability during inflationary and deflationary periods. The Fund’s positioning reflects an overweight in equities in anticipation of a soft landing for the U.S. economy. Concerns over persistent inflationary pressure and market concentration risks are carefully monitored, guiding the Fund’s investment decisions.

Overall, heightened market volatility and ongoing uncertainty reinforce the importance of a disciplined investment approach. With a focus on researching key drivers of participant outcomes, Fidelity’s target-date strategies aim to provide investors with a diversified portfolio that balances total returns with sensitivity to various risks. In its 27-year history of managing target-date funds, Fidelity’s approach has proven successful, offering investors the opportunity to navigate market turbulence while maintaining a long-term investment horizon.