American Funds has created a new target-date fund (TDF) evaluation tool, Target Date ProView.
Following the TDF guidelines the Department of Labor (DOL) issued in 2013, it enables users to select up to four target-date fund series for side-by-side comparison of glide paths, risks, returns, expenses, volatility, managers and fund profiles. Designed to be objective, the tool uses proprietary data from Morningstar.
Advisers can present the TDF data in summary or in detail and create reports that they can share with their plan sponsor clients. American Funds worked to make the tool, which can also be accessed on mobile devices, simple and easy to use.
Capital Group, American Funds’ parent company, recently surveyed 691 retirement plan advisers, sponsors and consultants about their evaluation of target-date funds and found that 66% do a “complete due diligence evaluation” of the TDFs in their plan at least every two years, although the advisers surveyed plan to do this more frequently than the sponsors. More than one third (35%) say they don’t do TDF evaluations more frequently because it “takes too much time” or “is too complex,” and of this group, 66% said they would find a TDF analytical tool helpful.
This is the first time that American Funds has created a TDF evaluation tool, Toni Brown, senior vice president, defined contribution, at Capital Group, tells PLANADVISER. “It came about for a couple of reasons. One was the importance of the DOL tips released in 2013,” she says. “We kept hearing from the marketplace that fiduciaries needed something to help them evaluate TDFs, which are such an important option in retirement plans. The tool is objective and interactive and allows people to get what they need in a simple manner.”
The free tool can be accessed at www.americanfunds.com/proview.