Targeted Help: How TDFs Aid Investors in the Current Market Crisis
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 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
Omar Aguilar is Chief Executive Officer and Chief Investment Officer of Schwab Asset Management, and President and CEO of Charles Schwab Investment Advisory, responsible for leading, developing, and overseeing the firms’ investment strategies. Omar is also responsible for the Schwab Center for Financial Research, which provides quality research and education, timely market insights, and practical guidance to help millions of investors make informed financial decisions.
Omar has more than 25 years of broad investment management experience in the equity markets, including managing index, quantitative equity, asset allocation, and multi-manager strategies. Prior to joining Schwab Asset Management in 2011, Omar worked at Financial Engines where he was responsible for managing more than $40 billion in assets from leading retirement plan sponsors in the defined contribution market. Before that, he served as head of quantitative equity for ING Investment Management (now known as Voya Investment Management), building and developing the group and managing more than $20 billion in assets with 15 global active, index and enhanced index strategies for pension funds, variable annuities, and mutual funds. Omar also served as head of quantitative research for Lehman Brothers' alternative investment management business and as a director of quantitative research and a portfolio manager with both Merrill Lynch Investment Management and Bankers Trust.
Jake Gilliam is a Managing Director and Head of Portfolio Construction Solutions supporting Schwab Asset Management®. In this role, Mr. Gilliam leads the Schwab Asset Management research, portfolio analytics, and investment portfolio strategist teams. Mr. Gilliam is responsible for the strategic direction of multi-asset class portfolios and portfolio construction across Schwab Asset Management, [including non-discretionary advisory services provided for Charles Schwab Trust Bank’s Collective Investment Trusts], and provides analytical support to advisers, institutions, and clients. Additionally, Mr. Gilliam provides strategic leadership for Schwab Asset Management’s multi-asset and sub-advised investment strategies, as well as for the firm’s portfolio construction framework. He also participates in Asset Allocation and Third-Party Investment Oversight committees and represents Schwab Asset Management’s multi-asset class strategies and framework to the institutional marketplace, clients, and the media.
Mr. Gilliam has more than 20 years of retirement industry and multi-asset management experience. Previously, he was the head of research and analytics, as well as head client portfolio strategist for Schwab Asset Management’s multi-asset strategies. Prior to that, Mr. Gilliam was the senior portfolio manager for Charles Schwab Trust Bank’s Collective Investment Trusts and the head of sub-adviser oversight for Schwab Asset Management. Additionally, Mr. Gilliam served as the interim head of asset allocation and portfolio manager for all of Schwab Asset Management’s multi-asset class funds. Prior to these roles, he oversaw the due diligence process for maintaining the Schwab Focus List.