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Rating:Why Did DWS LifeCompass Income Lose Its Way? Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, July 06, 2009

Why Did DWS LifeCompass Income Lose Its Way?

by: Kimberly Chin

Deutsche Bank's DWS Investments seemed like a good idea at the time, writes Wall Street Journal writer Tom Lauricella. The fund series started last year as a means to bring the bank into the next-generation for retirees, yet Deutsche had to shutter the DWS LifeCompass Income Fund earlier this year. And Deutsche isn't the only asset manager facing such a flop.

Deutsche's goal was to pay out a steady stream of income while holding stocks. As the market fell, the fund bought more bonds and ditched its stocks. And once the fund was basically pure bond, its insurance contract forced it to no longer buy stocks at all, i.e. transforming LifeCompass income into a permanent all-bond fund.

This eventually led Deutsche to halt sales of the $30 million DWS LifeCompass Income Fund in October and the fund returned investor's money earlier this year.

AllState Corp. had to withdraw a lineup of mutual funds that had launched in 2008. Similar to Deutsche Bank's DWS funds, AllState offered guarantees for older investors that would offer retirees income for life. The guarantees were a heavy cost as the market fell, causing AllState to shutter the funds.

Lauricella sees AllState's and Deutsche's woes as lessons for companies who are looking to offer retirees a predictable income or reduce their losses while trying to find both stable investments in stocks and low costs. Even the well-performing funds weren't invulnerable to the market downturn, Lauricella warns. 

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