Does your target date series have "Terrific" underlying funds? | Capital Group

Defined Contribution Insights

October 2018

Does your target date series have "Terrific" underlying funds?

A target date series is only as good as its underlying funds. This infographic below illustrates just how "Terrific" the underlying funds of American Funds Target Date Retirement Series® have been.

  • Rigorously screened — Morningstar applied strict criteria to more than 8,000 funds to create its latest list of "Terrific" funds. Only 28 funds made the grade, and eight of those were American Funds.
  • The most recognized funds — All eight of our "Terrific" funds are in our target date series — giving our series more recognized underlying funds than any other.

 


Eight of the underlying funds in American Funds Target Date Retirement Series® were recognized on the Morningstar "28 Terrific Funds" list.*

In evaluating target date funds, investors should consider how the various features of each fund, including the underlying funds, investment results, expenses and glide path construction, apply to their personal situation.
Source: "2018 Target-Date Fund Landscape," Morningstar, Inc., as defined by assets under management as of December 31, 2017.


Rigorously screened by Morningstar

Morningstar evaluated more than 8,000 funds based on manager ownership, fund results and expense ratios, as well as Morningstar risk, analyst and parent ratings. Less than half of 1% made the "Terrific" list.


American Funds has more “Terrific 28" funds than any other target date series

Eight of the underlying equity-focused funds in American Funds Target Date Retirement Series evaluated by Morningstar made its “Terrific 28” list -- the most of any target date series in the industry.

As of June 30, 2018

 

*Source: Morningstar, September 4, 2018, “Fund Spy: 28 Terrific Funds,” by Russel Kinnel. Morningstar's criteria for the “Terrific” list include: cheapest quintile of broad level category groupings, manager investment of more than $1 million in the fund, Morningstar Risk rating below the High level, Morningstar Analyst Rating of Bronze or higher, Parent rating of Positive, returns above the fund's benchmark over the manager's tenure. The criteria have changed over the years. Visit americanfunds.com/advisor/news/morningstar-terrific.html for more details.

Not all eight of our funds listed in the “28 Terrific Funds” are in each target date fund. Underlying funds may change over time.

 


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 or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing. 

Each target date fund is composed of a mix of the American Funds and is subject to the risks and returns of the underlying funds. Underlying funds may be added or removed during the year. 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 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 30 years after it reaches its target date. 

Content contained herein is not intended to serve as impartial investment or fiduciary advice. The content has been developed by Capital Group, which receives fees for managing, distributing and/or servicing its investments.

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.