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Rating:Even TDFs Are Getting the Gray Lady's Scrutiny on Fees Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, July 24, 2012

Even TDFs Are Getting the Gray Lady's Scrutiny on Fees

News summary by MFWire's editors

Investors now have nearly a dozen mutual fund TDFs to choose from. The growing number of lower-cost, all-index target-date funds, is the takeaway from the latest Popping the Hood report from BrightScope and Target Date Analytics [press release] — at least according to Ann Carrns of The New York Times

The launch of two new funds in 2011 — BlackRock Lifepath Index and Lincoln Advisors Presidential Protected Profiles — has brought the total number of all-index TDFs to 11, according to the report.

This has brought the overall expense ratio for TDFs down, Carrns writes. Index-fund TDFs often offer annual expenses of less than 20 basis points, like Vanguard and TIAA-CREF Lifecycle Index at 18 bps, and Fidelity Freedom Index at 19 bps. Compare that with 72 bps for the average institutional TDF, or an average expense ratio of 81 bps excluding index-only offerings.

The report also awarded letter grades to more than 40 fund series based on performance over the prior three years, risk, fees, strategy and the fund's parent company. Eight fund series received "A" grades, including Allianz Global, American Century, Invesco, JPMorgan, MFS, Pimco, Putnam and TIAA-CREF

Edited by: Irene Park

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