Release Date: May 6, 2010
U.S. Labor Department and SEC issue guidance on target date funds
Washington — The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the U.S. Securities and Exchange Commission (SEC) today announced guidance to help investors and plan participants better understand the operations and risks of target date fund investments.
Target date funds, also known as life cycle funds, are designed to provide a convenient way to invest for retirement by automatically changing their mix of investments in a way that is intended to become more conservative as the fund’s target date approaches. There can be significant differences among target date funds in how they invest and how they reallocate assets between equity and fixed income investments up to and after the target date of the fund. The guidance will assist investors and participants in assessing the benefits and risks associated with target date funds and the appropriateness of including such an investment as part of their retirement portfolios.
“Investor Bulletin: Target Date Retirement Plans” is available on EBSA’s Web site at www.dol.gov/ebsa or the SEC Web site at www.sec.gov. The bulletin also provides a list of additional resources to educate participants and other investors about retirement plans and mutual funds.
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