Prudential Investments entered the 401k target date fund space with the launch of Prudential Day One Mutual Funds, 12 target date funds available through group retirement plans and “financial intermediaries.”
“Choosing the right target date fund may be one of a fiduciary’s most important decisions,” Stuart Parker, president of Prudential Investments, said in a statement. “The Day One Mutual Funds are a solution to consider with a glide path constructed to mitigate risk at each stage of retirement with a competitive expense ratio.”
The Day One funds are already offered through collective investment trusts and separate accounts, and have an expense ratio in its R6 share class of 0.40 percent. Prudential Investments will also offer Day One Mutual Funds to plan sponsors in collaboration with Prudential’s Retirement business.
“Target funds have become the vehicle of choice within defined contribution plans, but not all target date funds are created equal,” added Jamie Kalamarides, head of Full Service Solutions at Prudential Retirement. “Our approach to the Day One Target Date Funds incorporates nearly a century of experience in fulfilling pension obligations and helping plan participants reach their desired retirement outcome.”
The Day One suite features 12 target date mutual funds and is available in five-year increments, ranging from 2010 to 2060, in addition to an income fund.
The announcement comes on the heels of Blackrock’s announcement last month of its new 401k target date fund lineup.
According to the $5 trillion investing behemoth, it made smart beta additions to its LifePath series of target date mutual funds to “better reflect today’s retirement investing needs—in particular, by offering a broader choice among varying degrees of active asset management within the fund series.”
BlackRock claims its LifePath Funds as the first target date funds and about one in four Fortune 100 companies use LifePath as part of their defined contribution plan investment menus.
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.
