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Prudential launches new TDF suite; Natixis releases ESG TDFs; and Vanguard reports reduced expense ratios.

By Javier Simon editors@plansponsor.com | December 22, 2016
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Prudential Launches New TDF Suite 

Prudential Investments has released its new Day One Mutual Funds, a series of 12 target-date funds (TDFs), which will be available through retirement plans and financial intermediaries.  

Choosing the right target-date fund may be one of a fiduciary’s most important decisions,” says Stuart Parker, president of Prudential Investments. "The Day One Mutual Funds are a solution to consider with a glide path constructed to mitigate risk at each stage of retirement with a competitive expense ratio.”

Prudential says the series is designed to mitigate risk for younger participants by accumulating higher equity exposure before preserving lower equity exposure for older investors to hedge against the risk of significant market losses.

“Studies show that Millennials early on tend to be underweight in equities despite having time on their side,” says Tony Fiore, senior vice president and national sales manager of retirement investment solutions at Prudential Investments. “So we have a higher equity exposure than most in the industry because we feel that accumulation is really the most important thing you can do early on … You eventually get to what we call the retirement red zone about 10 years before retirement. That’s when we try to take risk off the table as much as we can.”

The series also focuses on inflation protection to address the risk of eroding purchasing power for more than 30 years in retirement. Its hybrid investment approach combines active and passively managed strategies to reduce costs and generate potential for alpha, Prudential explains.

The Day One Mutual Funds are being offered at an expense ratio of 0.40%.

“Target funds have become the vehicle of choice within defined contribution plans, but not all target-date funds are created equal,” says Jamie Kalamarides, head of Full Service Solutions at Prudential Retirement. “Our approach to the Day One Target Date Funds incorporates nearly a century of experience in fulfilling pension obligations and helping plan participants reach their desired retirement outcome.”

The new Day One suite features 12 target-date mutual funds and is available in five-year increments, ranging from 2010 to 2060, in addition to an income fund. Additional information about Day One Mutual Funds can be found at DayOneFunds.com.

NEXT: Natixis Releases ESG TDFs

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