A Closer Look at Target Date | American Funds

A Closer Look at American Funds Target Date Retirement Series®

Portfolio managers Jim Lovelace, Wesley Phoa and Brad Vogt discuss the American Funds Target Date Retirement Series. The three managers are part of the Portfolio Oversight Committee supervising the series. They discuss how the series strives to balance longevity risk (outliving assets) and market risk (volatility) through the use of dividend-paying stocks. In addition, they share their approach to strategic and tactical asset allocation and describe the importance of aligning the glide path to participant objectives.

Balancing Longevity and Market Risk

Portfolio managers Jim Lovelace, Wesley Phoa and Brad Vogt discuss the importance of having meaningful equity exposure at retirement to help reduce longevity risk, or the risk of outliving one’s assets. However, investors also need to carefully manage market risk. The series seeks to do this by emphasizing historically less-volatile dividend-paying equities near retirement. This approach is facilitated by American Funds’ long history of managing to investor objectives like appreciation, income and preservation.

Managed to Objectives

Portfolio manager Wesley Phoa explains the benefits of managing the series to investor objectives.

Managed to Objectives

Portfolio manager Brad Vogt shares reasons for the series’ success so far.

A Deeper Look at Asset Allocation

Portfolio managers explain why different types of equities and bonds are used in different stages of the savings cycle. Active management has been key to the series’ dividend-oriented approach to managing volatility near retirement; through fundamental research, managers seek to identify companies that are likely to continue to pay or to grow their dividends. Bonds provide a mix of diversification, yield and capital preservation.

The Role of Fixed Income

Portfolio manager Wesley Phoa describes how bonds and equities work together in the series.

Rigorous Analysis and Oversight

Portfolio managers explain how the target date series is designed to work in multiple market and economic environments. They also review some of the analytical tools that managers use to assess how well the glide path is working for participants. Managers also describe the use of flexible underlying funds for tactical asset allocation.

An Adaptable

Portfolio manager Brad Vogt explains how the long history of the underlying American Funds allowed managers to test the glide path in a variety of market environments.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

This material is intended for use by financial professionals or in conjunction with the advice of a financial professional.

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.