T. Rowe Price Group is lowering its target-date fund fees and expanding its offerings.
The reductions, which are effective July 1, will vary depending on the specific product type and age, the company announced today. The resulting asset-weighted average fee reduction, based upon assets under management as of March 31, is 6.3 basis points across mutual funds and 4.8 basis points across trusts. Specific fee changes vary across products.
“The reductions follow the firm’s establishment last April of a new unitary fee structure for all target date mutual funds, in which an all-inclusive management fee rate was set,” T. Rowe Price said. “This top-down fee structure has enabled the firm to lower target date mutual fund fees without making underlying fund or allocation changes.”
In addition to lowering some fees, T. Rowe Price is expanding its Retirement Blend Funds, which combine active and passive strategies in selecting underlying investments, to more investors. The Retirement Blend Fund offers active management, which creates the ability to have increased returns and greater diversification in market sectors; and passive management, which provides market exposure with reduced costs.
Sebastien Page, global head of multiasset for T. Rowe Price, said in a statement, “Target date strategies are the core of many investors’ retirement portfolios today because of their simplicity, efficiency and value. The changes will add more choice and improved pricing to what we believe is already a robust selection of target date and multi-asset portfolios.”
T. Rowe Price recently announced that its target-date portfolios are undergoing a gradual transition to enhanced glide paths.
In conjunction with the new offerings, the firm is launching a new marketing campaign, with the tagline, “Retirement. Meet Your Match,” to showcase how the firm’s target-date solutions can help investors meet their retirement goals.
All of T. Rowe Price’s target date portfolios will continue to be managed by the management team of Wyatt Lee, head of target date strategies, and portfolio managers Kimberly DeDominicis and Andrew Jacobs van Merlen.
Earlier this year, T. Rowe Price announced that Morningstar upgraded its Retirement Funds to a Gold analyst rating, “making T. Rowe Price the only target date manager investing primarily in active underlying funds to have a Gold analyst rating, the highest offered.”
Robert Higginbotham, head of global distribution, said in a statement, “The retirement savings gap worldwide remains a challenge, compounded by uncertainties in the financial markets and the diverse range of needs and preferences among retirement investors, plan sponsors and advisors.”