How are target-date funds performing in the pandemic-driven market crisis? What’s the biggest surprise and/or validation revealed about the product, and how are retirement plan participants reacting in the current volatility?
There is a lot happening, and thankfully Omar Aguilar and Jake Gilliam are here to help sort it all out. Both are senior executives and target-date fund experts with Charles Schwab Investment Management, and have been through several economic and market cycles with the product.
They shed light on what to expect in the weeks and months ahead, and what participants should watch for with glide paths, risk, and other critical components within the retirement portfolio.
Disclosure:
Investors in mutual funds should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000. Please read it carefully before investing.
Schwab’s target date products include the Schwab Target Funds and Schwab Target Index Funds, mutual funds managed by Charles Schwab Investment Management , Inc. and the Schwab Managed Retirement Trust Funds™ (SMRT) and Schwab Indexed Retirement Trust Funds® (SIRT) (each a “Trust”, collectively the “Trusts” or “Collective Investment Trusts (CITs)”), collective trust funds maintained by Charles Schwab Trust Bank as trustee.
The Schwab Trust Bank CITs are available for investment only by eligible retirement plans and entities. Charles Schwab Trust Bank’s Collective Investment Trusts are not insured by FDIC or any other type of deposit insurance; are not deposits or other obligations of, and are not guaranteed by CSTB or any of its affiliates; and involve investment risks, including possible loss of principal invested. The Trusts are not mutual funds and are exempt from registration and regulation under the Investment Company Act of 1940 (the “1940 Act”), and their units are not registered under the Securities Act of 1933, or applicable securities laws of any state or other jurisdiction. Unit holders of the Trusts are not entitled to the protections of the 1940 Act. The decision to invest in the Trusts should be carefully considered. The Trusts’ unit values will fluctuate and may be worth more or less when redeemed, so unit holders may lose money. The Trusts are not sold by prospectus and are not available for investment by the public. The Trusts’ prices are not quoted in newspapers.
SMRT, composed of underlying non-proprietary active and passive sub-advised strategies, has expenses that vary by unit class and currently range from 33 bps to 89 bps. SIRT, composed of underlying non-proprietary passive sub-advised strategies, currently has one unit class with expenses of 7 bps. SMRT Unit Class V requires a $100M initial investment or plan asserts of $400M or more. SMRT Unit Class VI requires a $1 Billion initial investment. SIRT and other SMRT unit classes do no currently have investment minimums.
Collective investment trusts are regulated by the Office of the Controller of the Currency (OCC) or applicable state banking regulator.
Please go to schwabfunds.com/welcome-retirement for details.
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
