Skip to Content
Fund Times

T. Rowe Expands Target-Date Business With New Series

In a tough week for Marsico, the firm is removed as a subadvisor on two separate funds. Also, Calamos plans dividend and mid-growth funds, Oppenheimer to close Discovery to new investors, and John Hancock makes a raft of portfolio-management changes.

Mentioned: , , , , , , , , ,

 T. Rowe Price (TROW) will launch a second target-date series to complement its existing series, the Gold-rated T. Rowe Price Retirement series (launched in 2002). The new series, T. Rowe Price Target Retirement, is intended for investors who prefer a lower exposure to equities at their retirement date relative to the existing series. T. Rowe Price continues to stand by its existing series and believes that for most investors, the primary objective is to grow their savings so they can support their income needs throughout retirement. In order to achieve that goal, T. Rowe constructed the existing series' glide path (its mix of stocks and bonds over time) with an above-average exposure to stocks relative to its industry peers. T. Rowe believes some investors, however, have a different primary objective that focuses on reducing volatility at the retirement date. Some plan sponsors of defined-contribution retirement plans have similar concerns about market volatility at retirement. The new series will have a 42.5% allocation to stocks at the retirement date, which is in line with the industry average and well below the 55% equity stake of the existing series.

It's worth noting that the new series will invest across the same asset classes and underlying investment strategies as the existing series. It will also use an identical tactical-allocation strategy. The only major difference between the two series will be their glide paths. T. Rowe's existing series has been extremely successful in terms of performance and attracting assets. All of the funds in the series have trailing five-year returns through May 21, 2013, that top at least 87% of their respective category peers, and the series has the third-largest asset base in the industry with $89 billion as of April 30, 2013.

Morningstar Fund Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.