Defined Contribution Insights
Choosing the right target date fund provider is a crucial decision for plan investment committees — and fees aren't the only factor to consider.
DEFINED CONTRIBUTION INSIGHTS | February 2019
DEFINED CONTRIBUTION INSIGHTS | October 2018
DEFINED CONTRIBUTION INSIGHTS | June 2018
DEFINED CONTRIBUTION INSIGHTS | January 2018
For over 10 years, target date funds have been a Qualified Default Investment Alternative (QDIA) for defined contribution plans. Brad Vogt, American Funds portfolio manager and principal investment officer for American Funds Target Date Retirement Series® joined other investment professionals in an Asset TV Masterclass video to discuss target date funds, including:
Discussions about a target date series often center on the glide path. Less attention has been paid to the underlying equity and bond funds used within the glide path. In this video, Alan Berro — who helps oversee American Funds Target Date Retirement Series® — explains why the results of those underlying funds can dramatically affect investor outcomes.
Alan Berro, who helps oversee American Funds Target Date Retirement Series, discusses the importance of quality underlying funds in a target date series. The underlying investment strategies can dramatically affect outcomes for investors.
DEFINED CONTRIBUTION INSIGHTS | November 2017 | FEATURING Jeanell Novak & Rich Lang
In this video clip from the Asset TV Masterclass Best Practices for Defined Contribution Plan Design, American Funds senior retirement strategist John Doyle discusses how to measure investment success for a defined contribution plan:
In this Video from the Asset TV Masterclass, American Funds portfolio manager Jody Jonsson explains why it is important for a target date fund to be designed to build and protect wealth through retirement.
In its 2013 guidance on target date funds, the U.S. Department of Labor stressed the importance of thoroughly understanding a series’ asset allocation, fees and results. Yet evaluating target date funds can be complex given the diversity of offerings in the marketplace. An online tool, Target Date ProView, aims to make that process easier by providing insightful, objective data to compare target date series. In this video, Capital Group investment specialist Rich Lang and portfolio manager Wesley Phoa outline key criteria for evaluating target date funds and explain how Target Date ProView can help. Learn about:
American Funds Target Date Retirement Series® celebrated its 10-year anniversary this year. In this video, Jim Lovelace, member of the Portfolio Oversight Committee, and Rich Lang, target date investment specialist, share their thoughts on:
The Pension Protection Act took effect 10 years ago, leading to a surge of assets into target date funds. In this video, principal investment officer of American Funds Target Date Retirement Series® Brad Vogt shares his thoughts on what we’ve learned over the past 10 years, including:
DEFINED CONTRIBUTION INSIGHTS | October 2016
Home bias (a significant over investment in one’s home country) has been a long-entrenched pattern in self-directed defined contribution (DC) plans. A decade of efforts by plan sponsors in the U.S., including the addition of international funds to retirement plan menus, has failed to successfully spur participants to increase their exposure to non-U.S. assets; the result is that participants are missing out on potentially attractive investment opportunities abroad, including in emerging markets. At the same time, plan sponsors are grappling with the phenomenon of choice overload, as more than a decade of behavioral finance research has shown that the expansion of menu options has proved overwhelming for participants, creating confusion and inertia.
DEFINED CONTRIBUTION INSIGHTS | September 2016
Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and/or returns will vary, so investors may lose money. Investing for short periods makes losses more likely. View fund expense ratios and returns.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Each target date fund is composed of a mix of the American Funds and is subject to the risks and returns of the underlying funds. Underlying funds may be added or removed during the year. Although the target date funds are managed for investors on a projected retirement date time frame, the funds' allocation strategy does not guarantee that investors' retirement goals will be met. The target date is the year in which an investor is assumed to retire and begin taking withdrawals. American Funds investment professionals manage the target date fund's portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the fund gets closer to its target date. Investment professionals continue to manage each fund for 30 years after it reaches its target date.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. Investments in mortgage-related securities involve additional risks, such as prepayment risk, as more fully described in the prospectus. While not directly correlated to changes in interest rates, the values of inflation-linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations.
Fund shares of U.S. Government Securities Fund are not guaranteed by the U.S. government.
American Funds offers a range of share classes designed to meet the needs of retirement plan sponsors and participants. The different share classes incorporate varying levels of advisor compensation and service provider payments. Because Class R-6 shares do not include any recordkeeping payments, expenses are lower and results are higher. Other share classes that include recordkeeping costs have higher expenses and lower results than Class R-6.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
©2019 Morningstar, Inc. All Rights Reserved. Except for Lipper rating information, the information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar, its content providers nor the American Funds are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by American Funds.
Past results are not predictive of results in future periods.
Capture ratios reflect the annualized product of fund vs. index returns for all months in which the index had a positive return (upside capture) or negative return (downside capture).