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A closer look at our active underlying funds
Rich Lang
Multi-Asset Investment Director

 


Security selection plays an integral role in target date fund results.

 

This paper takes a closer look at the funds underlying the American Funds Target Date Retirement Series® in terms of both return and risk to illustrate how they seek to drive better outcomes for participants.

Key takeaways:

  • Most retirement plan participants who use target date funds are invested in passively implemented solutions

  • In addition to cost, retirement savers should evaluate a target date retirement series’ history and the potential of its underlying funds to produce desired outcomes

  • Research suggests that active investment selection in the Series’ underlying funds has played an outsized role in its relative results
     

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Rich Lang is a multi-asset investment director at Capital Group. He has 30 years of investment experience (as of 12/31/2023), all with Capital. He holds master's and bachelor's degrees from Loyola Marymount University.

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Target Date
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Although the target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met. Investment professionals manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.
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