Deals & People April 8, 2008

RealRetirement Funds Chooses Dow Jones Benchmark

PIMCO has chosen the Dow Jones Real Return Target Date Indexes to serve as benchmarks for the PIMCO RealRetirement funds.
Reported by

According to a press release, the Dow Jones Real Return Target Date Indexes are designed to serve as benchmarks for lifecycle portfolios that start out aggressively to grow assets and end with a conservative mix of investments based on the portfolio’s “target date.” The indexes also can serve as the basis for financial products.

“With the proliferation of target date strategies and investment products in recent years, we believe that benchmark selection is an important step in launching our own target date funds. We chose the Dow Jones Real Return Target Date Indexes because they provide an objective, well-constructed and appropriate representation of a diversified mix of assets that are suited for DC plan participants. The indexes’ focus on inflation protection and use of real assets also were key criteria in our decision. Dow Jones Indexes has truly been exceptional in taking target date indexes to the next level,’ said Bob Greer, Real Return Product Manager of PIMCO. The just-launched PIMCO RealRetirement suite is only the latest of a series of target-date offerings that have either come to market, or been expanded in recent months (see PIMCO Launches Target-Date Suite).

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Component Parts

Launched last month (see Dow Jones Introduces Benchmarks for Lifecycle Funds), the Dow Jones Real Return Target Date Indexes comprise 11 indexes, nine with target dates in 5-year intervals out to 2045, plus a Dow Jones Real Return 40+ Index and Dow Jones Real Return Today Index. Each index in the series represents a mix of sub-indexes representing stocks and bonds, Treasury Inflation Protected Securities (TIPS)—guaranteed by the U.S. government to pay interest above the rate of inflation—as well as commodities and real estate, which potentially counterbalance inflation.

The sub-indexes are the:

  • Dow Jones Wilshire Global Total Market Index,
  • Lehman Aggregate Bond Index,
  • Lehman U.S. TIPS Index,
  • Dow Jones-AIG Commodity Index and
  • Dow Jones Wilshire Real Estate Securities Index.

According to Dow Jones Indexes, the component asset classes are weighted within each Dow Jones Real Return Target Date Index to measure a targeted level of risk. Stocks and bonds are classified as nominal assets with high- and low-risk profiles, respectively. Real estate securities and commodities are considered real assets with high-risk profiles, and U.S. TIPS are considered real assets with a low-risk profile.

Data & Research April 7, 2008

Financial Concerns Causing Some to Delay Retirement

Four in 10 American adults (41%) are holding off on major life decisions – including retirement - either because they are financially strapped or worried about the U.S. economy.
Reported by

This represents an 11 percentage-point increase from a year ago, when 30% of U.S. adults said the same thing, according to results of a poll conducted by Harris Interactive for the American Institute of Certified Public Accountants (AICPA). Of the survey respondents who said they are postponing life goals, 28% cited a lack of savings as the principal reason, while 18% cited concerns about the country’s economic state.

Other decisions respondents reported delaying included home ownership, higher education, marriage, children, and medical procedures. The study found general anxiety over the economy is high, with 54% of respondents expressing a pessimistic outlook over the next year.

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“We know people are having a hard time making ends meet, which can affect life goals. It’s important that they try to save, even if it’s only a small amount each week,” said Carl George, chair of the AICPA’s National CPA Financial Literacy Commission.

The CPA profession created 360 Degrees of Financial Literacy – www.360financialliteracy.org – to educate Americans on how financial issues affect them at all life stages, and Feed the Pig (www.feedthepig.org), a separate campaign created with the Ad Council, helps 25- to 34-year-olds prepare for long-term financial security.

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