Schapiro: SEC reviewing target-date fund disclosures

By Staff Writer

Commentary May 04, 2009 at 08:00 PM

Share & Print

SEC Chairman Mary Schapiro continued her promises to aid investors in a speech at the Mutual Fund Directors Forum conference in Washington.

Among other issues, Schapiro said the SEC is examining target date funds' disclosure about their glide paths and asset allocations.

"The staff also is examining whether the same target date funds underlie both retirement and college savings plans," Schapiro said. "The staff has been working closely with the Department of Labor in light of target date funds' prevalence in participant-directed retirement funds. This important issue has also been an area of focus for Chairman Kohl and the Senate Special Committee on Aging."

According to Schapiro, over the past three years, target-date fund assets have increased from $66 billion at the end of 2005 to $152 billion in March, after peaking at $178 billion in 2007. "Growth in target date fund assets is likely to continue since these funds can be default investments in 401(k) retirement plans under the Pension Protection Act of 2006," she said.

The average loss in 2008 among 31 funds with a 2010 retirement date was almost 25 percent, according to Schapiro.

"I challenge those of you who are directors of target date funds to carefully review your funds' asset allocations and investments," the chairman said. Consider, in particular, whether your target date funds' asset allocations and investments are consistent with investor expectations."

NOT FOR REPRINT