Just as lifecycle funds change with time to conform to investors' needs, Fidelity Investments is changing the mix of its Freedom Funds to respond to market demands. By June, Fidelity plans to add four new funds to the lineup, which has grown 248% in assets since 2003.
The new Fidelity Freedom 2045, Fidelity Advisor Freedom 2045, Fidelity Freedom 2050 and Fidelity Advisor Freedom 2050 are geared toward addressing the needs of younger investors just coming into the market.
In addition, the new Strategic Real Return Fund and accompanying advisor share class will combine inflation-protected debt securities, floating rate loans, notes linked to commodities and real estate investment trusts to provide a fund that is not too risky, but that outpaces inflation.
Finally, Fidelity will increase the "roll-down" period of the Freedom Fund products, through which the lifecycle funds are moved into a correlating Freedom Income Fund. To account for longer life expectancies and increasing costs of healthcare, the roll down has been extended from between five and 10 years after the client's anticipated target retirement date to between 10 and 15 years.
With these moves, said Senior Vice President of Mutual Fund Product Management John Sweeny, "We believe that we're assisting individual investors, as well as investment professionals and their clients, by reducing the possibility that Americans will outlive their hard-earned retirement savings."
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