Newsroom American Funds Target Date Retirement Series® Recognized for Years of Strong Investment Results

Series vintages with 10-year track records outpaced their peers on a risk-adjusted return basis
 

Series wins 12 Refinitiv Lipper Fund Awards for select vintages; low-cost share classes upgraded to Morningstar "Gold."
 

LOS ANGELES, March 23, 2022 – The American Funds Target Date Retirement Series® celebrated its 15-year anniversary in February, with select vintages winning twelve 2022 Refinitiv Lipper Fund Awards. In addition, on January 25, Morningstar analysts upgraded the low-cost share classes of the Series (F-2, F-3, R-5 and R-6) to Gold, labeling it “one of the very best” target date series in the industry.

 

“The success of our Target Date Retirement Series over the last 15 years has been a firm-wide effort,” said Michelle J. Black, Solutions Portfolio Manager and Chair of the Target Date Solutions Committee at Capital Group. “With an average of 311 years of investment industry experience, our Target Date Solutions Committee members are supported by a deep bench of quantitative resources, including the Capital Solutions Group, our dedicated multi-asset investment team.”

 

After only 15 years, the American Funds Target Date Retirement Series serves nearly 8 million account holders with almost US $239 billion in assets, as of December 31, 2021. The Series’ Class R-6 shares returns (for vintages 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, and 2055) with 10-year track records have exceeded all of their respective Morningstar category peers on a risk-adjusted return basis, as measured by the Sharpe ratio, as of December 31, 2021.2 In upgrading the Series’ low-cost share classes to Gold, Morningstar analysts noted recent research-driven allocation adjustments - part of Capital Group’s continuous evaluation process - which enhanced the Series’ geographic flexibility, making it easier to pursue investment opportunities across the globe. Three out of the five underlying pillars of the Series, Process, Price, and People - are now rated “High” by Morningstar.

 

“As the lowest cost actively managed mutual fund target date series in the industry3, the American Funds Target Date Retirement Series has also generated the highest risk-adjusted returns of any target date mutual fund series over the past 10 years,” said Kiesha Earle, Head of Target Date Business Development at Capital Group. “We are honored that Refinitiv has once again recognized our Series, which aims for a balance of building wealth in the accumulation period and conserving wealth as one approaches retirement and beyond, using strong underlying funds as our building blocks.”

 

Following is a complete list of American Funds honored by Lipper in 2022:

 

Fund name

Ticker symbol

Lipper classification

Winner year – 3, 5 or 10

American Funds 2030 Target Date Retirement Fund®, R-6RFETXMixed-Asset Target 2030 Funds10
American Funds 2035 Target Date Retirement Fund®, R-6RFFTXMixed-Asset Target 2035 Funds5, 10
American Funds 2040 Target Date Retirement Fund®, R-6RFGTXMixed-Asset Target 2040 Funds5, 10
American Funds 2045 Target Date Retirement Fund®, R-6RFHTXMixed-Asset Target 2045 Funds5, 10
American Funds 2050 Target Date Retirement Fund®, R-6RFITXMixed-Asset Target 2050 Funds5, 10
American Funds 2055 Target Date Retirement Fund®, R-6RFKTXMixed-Asset Target 2055+ Funds5, 10
American Funds 2060 Target Date Retirement Fund®, R-6RFUTXMixed-Asset Target 2060 Funds5
American Funds Strategic Bond Fund SM, R-6RANGXCore Plus Bond Funds3, 5
American Funds Mortgage Fund®, R-6RMAGXIntermediate U.S. Government Funds10


Morningstar categories

American Funds Target Date fund

Morningstar category

Ten-year Sharpe ratio rankings

American Funds Target Date 2065

Morningstar Target Date 2065+

-

American Funds Target Date 2060

Morningstar Target Date 2060

-

American Funds Target Date 2055

Morningstar Target Date 2055

1 of 64

American Funds Target Date 2050

Morningstar Target Date 2050

1 of 85

American Funds Target Date 2045

Morningstar Target Date 2045

1 of 84

American Funds Target Date 2040

Morningstar Target Date 2040

1 of 93

American Funds Target Date 2035

Morningstar Target Date 2035

1 of 85

American Funds Target Date 2030

Morningstar Target Date 2030

1 of 93

American Funds Target Date 2025

Morningstar Target Date 2025

1 of 88

American Funds Target Date 2020

Morningstar Target Date 2020

1 of 64

American Funds Target Date 2015

Morningstar Target Date 2015

1 of 44

American Funds Target Date 2010

Morningstar Target Date 2000-2010

1 of 52

 

10-year Sharpe ratios were calculated by Capital Group based on data obtained from Morningstar. Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the portfolio’s historical risk-adjusted performance.


All funds began on February 1, 2007, except for the 2055 fund, which began on February 1, 2010; the 2060 fund, which began on March 27, 2015; and the 2065 fund, which began on March 27, 2020. The rankings do not reflect the effects of sales charges, account fees or taxes. Past results are not predictive of results in future periods. While American Funds R-6 shares do not include fees for advisor compensation and service provider payments, the share classes represented in the Morningstar category have varying fee structures and can include these and other fees and charges resulting in higher expenses and lower returns.
 

The Morningstar category includes active, passive and hybrid target date funds, as well as those that are managed both “to” and “through” retirement. Approximately one-third of the funds within the 2000–2010 category have a target date of 2005. In an effort to manage the risk of investors outliving their savings while managing volatility, our approach to allocating between stocks and bonds puts more emphasis on stocks (particularly on dividend-paying stocks) than some other target date funds.
 

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect expense reimbursements, without which results would have been lower.

1 Average years of investment industry experience as of December 31, 2021.
2 Source: Capital Group, using Morningstar data.
3 Source: Capital Group, using data obtained from Morningstar as of December 31, 2021. Data referenced is of the lowest cost mutual fund share class for each peer target date series comparing average expense ratio, which is a straight average of expenses of all vintages of the lowest cost share class available as of December 31, 2021. The percentage of a series’ assets in underlying active strategies (as calculated by Morningstar) was used to classify each series as active (80% to 100% actively managed), hybrid (20% to 80%) or passive (less than 20%). The active category contained 17 series, hybrid contained 20 series, and passive contained 14 series.

About Capital Group

 

Capital Group, home of the American Funds, has been singularly focused on delivering superior results for long-term investors using high-conviction portfolios, rigorous research and individual accountability since 1931.

 

As of December 31, 2021, Capital Group manages more than $2.7 trillion in equity and fixed income assets for millions of individual and institutional investors around the world. Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

 

For more information, visit capitalgroup.com.

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.


Investments in mortgage-related securities involve additional risks, such as prepayment risk.
 

Although the target date funds are managed for investors on a projected retirement date time frame, the funds' allocation strategy does not guarantee that investors' retirement goals will be met. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. American Funds investment professionals manage the target date fund's portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the fund gets closer to its target date. Investment professionals continue to manage each fund for approximately 30 years after it reaches its target date.

The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.

American Funds Strategic Bond Fund may engage in frequent and active trading of its portfolio securities, which may involve correspondingly greater transaction costs, adversely affecting the fund’s results.
 

We offer a range of share classes designed to meet the needs of retirement plan sponsors and participants. The different share classes incorporate varying levels of advisor compensation and service provider payments. Because Class R-6 shares do not include any recordkeeping payments, expenses are lower and results are higher. Other share classes that include recordkeeping costs have higher expenses and lower results than Class R-6.
 

Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries.
 

The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional cash securities, such as stocks and bonds. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
 

The Refinitiv Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers.
 

The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information, see lipperfundawards.com. Although Refinitiv Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv Lipper.
 

Refinitiv Lipper Fund Awards, ©2022 Refinitiv. All rights reserved. Used under license.
 

The Morningstar Analyst Rating™ is not a credit or risk rating. It is a subjective evaluation performed by Morningstar’s manager research group, which consists of various Morningstar, Inc. subsidiaries (“Manager Research Group”). In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission.
 

The Manager Research Group evaluates funds based on five key pillars, which are process, performance, people, parent, and price. The Manager Research Group uses this five-pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark, or in the case of exchange-traded funds and index mutual funds, a relevant peer group, over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weight of each pillar may vary. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s conviction in a fund’s prospects for outperformance. Analyst Ratings ultimately reflect the Manager Research Group’s overall assessment, are overseen by an Analyst Rating Committee, and are continuously monitored and reevaluated at least every 14 months. For more detailed information about Morningstar’s Analyst Rating, including its methodology, please go to global.morningstar.com/managerdisclosures/.
 

The Morningstar Analyst Rating (i) should not be used as the sole basis in evaluating a fund, (ii) involves unknown risks and uncertainties which may cause the Manager Research Group’s expectations not to occur or to differ significantly from what they expected, and (iii) should not be considered an offer or solicitation to buy or sell the fund. Past results are no guarantee of results in future periods.
 

© 2022 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by Capital Group.
 

All Capital Group trademarks referenced are registered trademarks owned by The Capital Group Companies, Inc. or an affiliated company. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies.
 

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
 

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