Prudential has launched new target-date funds designed to help plan participants prepare for their retirement.
The Day One funds are based on the analysis of savings rates and employer contributions from 850,000 plan participants, says the firm.
The funds' glide path begins with a 97 percent allocation to U.S. and international equities, commodities and real estate to provide for potential growth. As the participant ages and nears the "Retirement Red Zone"—the 10 years before and after retirement—exposure to equities decreases and the funds significantly shift to more conservative investments, according to Prudential. The exposure to equities continues to decrease during retirement and the asset allocation stabilizes 10 years after the target date at 26 percent equities, 9 percent commodities and real estate and 65 percent fixed income.
A key feature of the funds, sub-advised by Quantitative Management Associates, an asset management affiliate of Prudential Financial, is the inclusion of non-traditional asset classes, such as commodities and real estate, as well as Treasury Inflation Protected Securities (TIPS), according to Prudential.
“American workers need solutions that help them reach their ‘Day One’ of retirement confident that they will have the income they need for all the days that follow,” said Jamie Kalamarides, senior vice president, Institutional Investment Solutions, Prudential Retirement. “The funds are an example of Prudential’s commitment to help address the complexity of retirement planning.”
The funds are offered in five-year increments through 2060. There is also an income fund for current retirees and individuals nearing retirement.