Index-based lifecycle investing: A customisable solution for US dollar-based investors

In this paper, we explore index-based asset allocation solutions for US dollar investors seeking to implement a “lifecycle” strategy in support of a long-term retirement savings plan.

Using different indices from the FTSE Russell range, we explore hypothetical asset allocations for lifecycle investors of different ages. We then examine two different lifecycle strategy use cases: one prioritising long-term growth and higher retirement income through reinvestment, the other prioritising increased financial flexibility as retirement approaches.

Key takeaways:

• Lifecycle investing simplifies retirement planning
  Lifecycle (or target-date) investing offers a structured, age-based approach to asset allocation, automatically adjusting risk exposure over time. It allows younger investors to benefit from equity-driven growth, while older investors transition toward bonds and cash equivalents to preserve capital and reduce volatility as retirement nears

• Index-based lifecycle strategies are cost-effective and scalable
  Leveraging FTSE Russell indices, the research demonstrates how passive, index-based lifecycle strategies offer a low-cost, diversified alternative to active management. These strategies are ideal for long-term investors seeking simplicity, automatic rebalancing, and broad market exposure
• Lifecycle strategies can be tailored to different retirement goals
  Through case studies of two investors—Jack (income-focused) and Emma (growth-focused)—the research shows how lifecycle strategies can be customised to support different financial priorities, whether that’s building early income or maximising long-term wealth through reinvestment

Points of differentiation:

• US Dollar focus with proven index building blocks
  This research adapts the FTSE Lifecycle framework for US dollar-based investors, using trusted indices like the Russell 1000®, USBIG® Corporate Bond Index, and US Treasuries to ensure relevance and robustness
• Empirical validation through historical stress testing
  The strategy is backed by 30+ years of historical data and tested through real-world crises (e.g., 2008, 2022), proving its ability to capture growth in early years and protect capital in later years
• Customisability across asset classes, currencies and ESG preferences
  FTSE Russell’s lifecycle solutions can be tailored to include sustainable investing overlays, smart beta indices, and multi-currency exposures—offering flexibility to align with diverse investor goals and philosophies

What does our research mean for investors?

This research reinforces the value of lifecycle investing as a disciplined, automated, and risk-aware strategy for long-term retirement planning. For investors, it means:

• Confidence in staying invested through market cycles, knowing their portfolio adjusts automatically with age
• Access to cost-efficient, passive strategies that don’t require active management or market timing
• The strategy is resilient in volatile markets, helping protect retirement savings when it matters most