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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1 OR 2

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

AMERICAN FUNDS TARGET DATE RETIREMENT SERIES®

Delivering value at a low cost

It’s about more than fees

All target date providers make crucial investment decisions that impact participant outcomes. So the focus should be on the benefit, not just the cost.



No target date fund is truly passive

The table below shows a selection of underlying investment decisions made by target date providers. Even passive providers make active asset allocation decisions.

Type of target date series

Asset allocation decision

Selection of underlying securities

Fully devoted to maximizing returns and managing risk relative to the broad market


Active

Hybrid

Passive

Source: Capital Group. Target date types based on methodology from Morningstar, which uses the percentage of a series’ assets in underlying active strategies to classify each series as active (80% to 100% actively managed), hybrid (20% to 80% actively managed) or passive (less than 20% actively managed). Blank fields indicate the source of returns isn't applicable to that type of target date series.



Giving participants more, for less

Expense ratios for target date series vary significantly, but our Series stands out as one of the cheapest despite using 100% active underlying funds — undercutting hybrid providers that mix passive and active funds.

Average annual expense ratio of 55 target date series

This chart shows how our Series has lower fees than the average active and hybrid target date series, but has slightly higher annual fees than the average passive series at 0.36% vs. 0.25%

Source: Capital Group, using data obtained from Morningstar. As of December 31, 2019. Data shown is of the lowest cost mutual fund share class for each peer target date series. Average expense ratio shown is a straight average of expenses of all vintages of the lowest cost share class available as of December 31, 2019. 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 24 series, hybrid contained 16 series, and passive contained 15 series.



Outpacing the competition

Not only does our Series cost less than most competitors, it has delivered impressive results against all peer types.

Strong results vs. all series types

5-year rolling sucess rate, since March 2007

This chart shows that over rolling five-year periods, our Series has outpaced the average active, hybrid, and passive series more than 90% of the time. As a result, the Series delivered an average annual excess returns of 1.36% against passive peers, 1.33% against hybrid peers, and 1.23% against active peers over the period.

Source: Capital Group, using data obtained from Morningstar. As of December 31, 2019. Data for American Funds is Class R-6 shares. Each vintage within American Funds Target Date Retirement Series was compared to existing funds in the same Morningstar category. The relative results for each vintage over each rolling period were used to calculate the percentages. The percentage of a series’ assets in 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%). Each Morningstar category includes lowest cost share class with sufficient track record. The active category contained 24 series, with 239 funds, hybrid contained 16 series, with 184 funds, and passive contained 15 series, with 164 funds.



Cheaper isn’t always better

American Funds Target Date Retirement Series vs. largest passive peers

Our Series costs more than its largest passive competitors. But the cost has been worth it: On average, the Series has delivered nearly four times its fee in additional return. Below, we illustrate the relationship between returns and expense to show why the focus should be on outcomes, not just fees. 

This chart shows how our Series has delivered an average annualized net excess return (since earliest common inception) vs. its seven largest passive competitors by a magnitude that far outpaces the average additional fee. Average annualized net excess return against the peer group totaled 1.0% vs. the 0.24% average additional fee.

Source: Capital Group, using data obtained from Morningstar. As of December 31, 2019. Data for American Funds is Class R-6 shares and of the lowest cost share class with sufficient track record for each peer target date series. Each vintage within American Funds Target Date Retirement Series was compared to existing vintages in the same Morningstar category since earliest common inception of the two vintages. Excess return represents annualized lifetime excess return since earliest common inception and ranged from 0.43% to 1.40%. Largest seven series are based on mutual fund AUM as of December 31, 2019 and ranged from $2.64 billion to $513.30 billion. The percentage of a series’ assets in 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%). Annual fee differential was based on expense ratios as of December 31, 2019 and ranged from -0.17% to -0.28%.

UNDERLYING FUNDS

Solid building blocks

Our funds have delivered peer-beating results and held up well in down markets.

GLIDE PATH

A distinctive approach

Our glide path is different. While our Series changes the mix between stocks and bonds, it also changes the types of assets held. This is designed to better align with participant needs over time.

OVERVIEW

What sets the American Funds Target Date Retirement Series apart?

We take an an active approach, focusing on building and preserving the wealth it takes a lifetime to earn.

Compare us to the competition

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Our team is ready to help you help participants.

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.

Each target date portfolio is composed of a mix of underlying funds and is subject to the risks and returns of those funds. Underlying funds may be added or removed during the year. 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. 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 manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.

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.

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

Use of this website is intended for U.S. residents only.

American Funds Distributors, Inc., member FINRA.

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.

©2021 Morningstar, Inc. All Rights Reserved. Except for Lipper rating information, 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, its content providers nor Capital Group are responsible for any damages or losses arising from any use of 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.

Important investment disclosures

Figures shown are past results for Class R–6 shares and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. View fund expense ratios and returns. Returns shown at net asset value (NAV) have all distributions reinvested. For current information and month–end results, visit americanfundsretirement.com.

Capital Group offers 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.

Certain share classes were offered after the inception dates of some funds. Results for these shares prior to the dates of first sale are hypothetical based on the original share class results without a sales charge, adjusted for typical estimated expenses.

  • Class R-6 were first offered on 5/1/2009.

 

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. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. 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. Investments in mortgage-related securities involve additional risks, such as prepayment risk, as more fully described in the prospectus. Higher yielding, higher risk bonds can fluctuate in price more than investment-grade bonds, so investors should maintain a long-term perspective. While not directly correlated to changes in interest rates, the values of inflation-linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations. Fund shares of U.S. Government Securities Fund are not guaranteed by the U.S. government.

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. Please see capitalgroup.com for more information.