Get ‘em while they’re young. Franklin Templeton Investments recently announced the expansion of its retirement target fund lineup for investors with the introduction of Franklin LifeSmart 2055 Retirement Target Fund.
Like other funds in the lineup, the fund’s assets are allocated among the broad asset classes of equity, fixed-income and alternative investments by investing predominantly in other Franklin Templeton mutual funds, based on each underlying fund’s predominant asset class and strategy. The new fund joins a lineup that includes 2015, 2020, 2025, 2030, 2035, 2040, 2045 and 2050 funds.
“The Franklin LifeSmart 2055 Retirement Target Fund is aimed at millennial investors who plan to retire in or near the year 2055 and reflects our ongoing commitment to innovating solutions for the retirement marketplace,” said Yaqub Ahmed, head of the investment-only division in the U.S, for Franklin Templeton Investments.
Like the existing Franklin LifeSmart Retirement Target Funds, the new 2055 fund will target a five percent allocation to alternative investment funds to take advantage of their lower correlation, in general, with traditional asset classes.
The funds’ managers have the ability to tactically adjust this allocation within a range of zero to 10 percent as they shift the funds’ allocations based on changing market conditions.
“As part of our continued efforts to generate better designed retirement funds, we include a strategic weighting to alternative investment funds for each of our Franklin LifeSmart Retirement Target Funds,” said Tom Nelson, CFA, one of the funds’ portfolio managers with Franklin Templeton Solutions. “We have found through extensive research and modeling that this asset class may provide diversification benefits and may help improve the risk/return profile of these portfolios.”
Franklin LifeSmart Retirement Target Funds combine the simplicity of asset allocation and risk management with active, flexible portfolio management, according to the company. The funds’ managers continuously evaluate each fund’s strategic allocation and have the flexibility to make tactical adjustments to seek the highest level of long-term total return consistent with its asset allocation strategy.
This risk-focused approach to portfolio management enables the investment team to identify short-term market opportunities and dislocations and to implement tactical shifts between asset classes based on the assessment of the most significant risks and opportunities identified in the market.
As a broadly diversified portfolio, each of the Franklin LifeSmart Retirement Target Funds is organized as a “fund of funds” that invests primarily in three specialized managers—Franklin, Templeton and Mutual Series—and may also include an array of ETFs for additional diversification.
The range follows a “to retirement” glide path, which means that each of the funds reaches its most conservative allocation at its target date, a critical point when investors may start to take withdrawals from their accounts. In contrast, “through retirement” glide paths reach their most conservative allocation sometime after the funds’ target dates, often many years later.
“Each of the Franklin LifeSmart Retirement Target Funds is designed for investors who seek to achieve high portfolio value at retirement,” said Tony Coffey, CFA, another of the funds’ portfolio managers with Franklin Templeton Solutions. “We pride ourselves on conservative innovation, developing and managing retirement solutions that seek to help investors meet their long-term investment outcomes.”
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.
