Portfolio managers Jim Lovelace, Wesley Phoa and Brad Vogt discuss the importance of having meaningful equity exposure at retirement to help reduce longevity risk, or the risk of outliving one’s assets. However, investors also need to carefully manage market risk. The series seeks to do this by emphasizing historically less-volatile dividend-paying equities near retirement. This approach is facilitated by American Funds’ long history of managing to investor objectives like appreciation, income and preservation.
Managed to Objectives
A Strong Track Record
Portfolio managers explain why different types of equities and bonds are used in different stages of the savings cycle. Active management has been key to the series’ dividend-oriented approach to managing volatility near retirement; through fundamental research, managers seek to identify companies that are likely to continue to pay or to grow their dividends. Bonds provide a mix of diversification, yield and capital preservation.
Glide Path Within a Glide Path
The Role of Fixed Income
Portfolio managers explain how the target date series is designed to work in multiple market and economic environments. They also review some of the analytical tools that managers use to assess how well the glide path is working for participants. Managers also describe the use of flexible underlying funds for tactical asset allocation.
The Role of the Oversight Committee
The Importance of Flexible Funds
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.