SEC To Eye Target Date Funds

The Securities and Exchange Commission will be focusing on several areas in the year ahead, including target date funds, surprise inspections of money managers, disclosures and 12(b)1 fees.

SEC Chairman Mary L. Schapiro announced those plans during a recent speech in Washington, D.C.

In her remarks, Shapiro said she has asked the SEC staff to prepare a rule proposal to provide additional information to investors when a target date fund includes a specific target date in its brand name. The concern is the potential for "target date fund names to confuse investors or lull them into a false sense of security," she said.

In addition, she said she is seeking rule recommendations about the marketing of target date funds. The concern is that some advertisements perpetuate a "set it and forget it" mentality, she said.

Shapiro also acknowledged that such funds are designed to become more conservatively invested as the investor's target retirement date approaches. However, not all such funds are created the same, "and some with very near-term target dates lost substantial amounts of investors' money in 2008," she said.

Among other areas slated for SEC attention in 2010 are:

–Point-of-sale disclosure. The goal is to get "helpful, relevant information to investors at a time when it is most meaningful–that is, when they are making an investment decision, at the point of sale–not after," the chairman said in her remarks, which are posted on the SEC Web site.

–12(b)-1 fee disclosure: Shapiro says she is seeking staff recommendation for SEC consideration on 12b-1 fees charged by mutual funds. "Investors may have no idea these fees are being deducted from their mutual funds, what services they are paying for, or who they are ultimately compensating," Shapiro said.

SEC To Eye Target Date Funds

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SEC To Eye Target Date Funds

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