Franklin Templeton Investments has expanded its retirement target fund lineup for U.S. investors with the introduction of Franklin LifeSmart 2055 Retirement Target Fund.
Like other funds in the lineup, the fund’s assets are allocated among the broad asset classes of equity, fixed-income and alternative investments by investing predominantly in other Franklin Templeton mutual funds, based on each underlying fund’s predominant asset class and strategy. The new fund joins a lineup that includes 2015, 2020, 2025, 2030, 2035, 2040, 2045 and 2050 funds.
“The Franklin LifeSmart 2055 Retirement Target Fund is aimed at Millennial investors who plan to retire in or near the year 2055 and reflects our ongoing commitment to innovating solutions for the retirement marketplace,” says Yaqub Ahmed, head of the investment-only division in the U.S. for Franklin Templeton Investments.
Like the existing Franklin LifeSmart Retirement Target Funds, the new 2055 fund will target a 5% allocation to alternative investment funds to take advantage of their lower correlation, in general, with traditional asset classes. The funds’ managers have the ability to tactically adjust this allocation within a range of 0% to 10% as they shift the funds’ allocations based on changing market conditions.
“As part of our continued efforts to generate better designed retirement funds, we include a strategic weighting to alternative investment funds for each of our Franklin LifeSmart Retirement Target Funds,” says Tom Nelson, one of the funds’ portfolio managers with Franklin Templeton Solutions. “We have found through extensive research and modeling that this asset class may provide diversification benefits and may help improve the risk/return profile of these portfolios.”
Each of the Franklin LifeSmart Retirement Target Funds is organized as a “fund of funds” that invests primarily in three specialized managers—Franklin, Templeton and Mutual Series—and may also include an array of exchange-traded funds (ETFs) for additional diversification. The range follows a “to retirement” glide path, which means that each of the funds reaches its most conservative allocation at its target date.