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Banking, finance, and taxes

An SEC Concern Over Target Date Retirement Fund Disclosures

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By Jon C. Ogg Updated Published
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The Securities and Exchange Commission is highlighting something which may be a concern for the popular mutual fund themes called Target Date Retirement Funds.  For the billions and billions of dollars which have been committed to these, it is not such a concern over their viability nor over their legitimacy, but it does highlight disclosure concerns.  Investors generally have some cause for concern when they see SEC efforts regarding investment themes which have been popular.

Target Date funds offer a great product in theory.  If you know you have a 25-year or 40-year timeline before retirement, you can just let the money manager in charge of the fund have a predetermined mix of stocks and bonds for your portfolio.  Still, many advisors call this a cookie-cutter model and many have highlighted that investors really do not understand what they are buying when you look at the true mix of assets under stocks and bonds.

Now the SEC is seeking comment on the results of investor testing regarding target date retirement funds. The SEC said that it plans to consider the comments before acting on a proposal it issued back in 2010 intended to enhance the information provided to individuals investing in such funds. That proposed rule would generally require target date retirement funds to more prominently disclose the fund’s asset allocation at the target date.

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JON C. OGG

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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