Target Date Funds: Fiduciary Concerns for Plan Sponsors
Target-date funds (TDFs) have become the standard default investment choice for 401(k) plans since the 2006 Pension Protection Act approved them for this use. However, TDFs from different providers should not be considered perfect substitutes. They differ in several key areas: investment philosophy, glide paths, and costs. Understanding these differences is a requirement of plan sponsors under ERISA’s “prudent expert” rule when choosing the investment line up for their 401(k) plan. This paper seeks to explain the distinctive characteristics of TDFs in an effort to help investment committees...
Read MoreApril 2013: Should we be Investing at Record Highs?
Recently US stock market indices have reached record highs. The last two times a record was set was in October 2007 and March 2000 and significant downturns followed the “financial crisis” and the “dot com bubble”. We have heard from a handful of clients who are concerned about investing during/at the market “top”. The question is usually along the lines: “Should we really be investing in stocks now that we’re at a record high”? In cases where we are putting new money to work the concern is: “Aren’t we buying high”? The chart below is also the Dow for the same period of time but it...
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