To meet the income needs of retirees, First American Funds has launched the Income Builder Fund. The fund offers monthly dividends, which investors can use for living expenses or have reinvested.
The fund, designed as a fund-of-funds, invests in both fixed income and equity securities to offer greater opportunities for growth and to balance market risks. Its underlying investments are the First American High Income Bond Fund, U.S. Government Mortgage Fund, Real Estate Securities Fund and Large Cap Value Fund.
Although the target holdings of the Income Builder Fund are 25% in each of these funds, managers of the First American Income Builder Fund have the flexibility to change the weightings of the fund's holdings in each of these four funds to between 10% and 40%, to take advantage of changing market opportunities and minimize risk.
"The Income Builder Fund is designed to meet the unique retirement needs of today's Baby Boomers," said Mark Jordahl, chief investment officer of First American Funds and a member of the fund's portfolio management team.
First American noted that income will become an increasingly critical issue for older Americans in light of the fact that statistics already show for a couple aged 65 or older today, there is a 50% chance that one of them will reach age 92.