Like Fidelity’s target-date Freedom Funds, the Fidelity Income Replacement Funds start out more aggressive, with a larger allocation of equity, and gradually shift over time to a greater emphasis of fixed income and short-term funds. The funds, which have low expense ratios of 54 basis points to 65 basis points, also make monthly payments to investors.
“Retirees struggle to understand how much of their savings they can comfortably tap each year without pacing their future lifestyle at risk,” said Fidelity President Rodger A. Lawson.
Referring to the new mutual funds and annuity, he added, “These products meet specific needs in a retiree’s income portfolio, and also can work together to satisfy investor demand for guaranteed income, investment growth, product flexibility and low costs—a combination of benefits that redefines industry leadership.”
Fidelity also updated its websites for advisers and individual investors to include new retirement income tools, strategies and multimedia product videos.
Boyce I. Greer, president of fixed income and asset allocation at Fidelity, added: “These funds are truly unique, providing a variety of investor benefits in a highly flexible, easily accessible, low-cost structure that is different from anything else out there.” Boyce said that Fidelity expects investors will mix and match funds with different time horizons to create income, possibly even laddering them with other income products such as annuities.
