The SEC has reopened the public comment period for target-date fund regulations, the SEC announced Thursday.
The SEC is considering recommendations from its Investor Advisory Committee to increase oversight of target-date funds, which are designed to reallocate assets as the fund holder nears retirement.
The SEC says it reopened the comment period on the regulations to address the committee's concerns raised in April about the inadequacy of a proposal for target-date funds to include a graphic showing how asset allocation changes over time. The committee recommended that such a glide path illustration should be based on a standardized measure of fund risk, either as a supplement to or instead of how asset allocation changes.
The choices of assets within an asset class can have a significant impact on fund risk, the committee said. Looking only at asset allocation may mask big differences in risk levels of target-date funds that have similar or identical asset-allocation glide paths, it added. The committee wants target-date fund prospectuses to disclose the policies and assumptions used to design and manage risk over the life of the fund.
Comments will be due 60 days after the request is published in the Federal Register. The publication date has not been announced as yet.