When you use target-date funds in your retirement plan, you’re helping participants prepare for retirement by providing access to a professionally managed portfolio that’s pre-diversified across stocks, bonds and cash instruments. At the same time, you’re addressing many of the crucial fiduciary obligations that loom large for plan sponsors today.
Learn more about target-date funds and features to evaluate when selecting a target-date fund for your retirement plan.
1. Empower Participants with Target-Date Funds
Since there are no investment “do overs” once they’re retired, your plan’s participants must get it right the first time. A diversified target-date fund is one way they can prepare for their retirement, and it helps you meet your fiduciary responsibilities.
2. Analyze the Glide Path
Target-date fund providers take varying approaches to glide path design (changes to the fund’s asset allocation to help reduce volatility before retirement). When evaluating target-date portfolios for your plan, use a checklist to help determine if risk exposure and return potential are appropriate at all points along the way.
3. Evaluate the Diversification Strategy
Investing in a large number of asset classes does not guarantee diversification. Consider the quality of the diversification strategy and assess whether the funds are invested in asset classes that expand return potential without taking on excess risk.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost.
Past performance is no guarantee of future results.
Diversification does not assure a profit or protect against a loss of principal.
The opinions expressed are those of our investment professionals, and are no guarantee of the future performance of any American Century Investments® portfolio. This information is not intended to serve as investment advice; it is for educational purposes only.