Fund managers and other experts say that target-date funds need to increase the amount of information they provide investors to understand their investment risk. But they don’t want the Securities and Exchange Commission to change the way the funds are named.

On June 16, the SEC unanimously approved of proposed rule changes to improve disclosure of the risk factors in target-date funds – an estimated $270 billion market. The SEC now wants to require the marketing materials for target-date funds to include a visual depiction such as a table, chart or graph which would show the fund’s glide path over time. And those materials must also include a statement of the fund’s asset allocation at the “landing point” or the participants’ anticipated retirement date. The SEC also wants issues of target-date investment funds to use tag lines to describe the asset allocation of the fund. The tag line which would come immediately after the fund’s name should say what percentage of the assets are in stocks, bonds and cash.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access