Capital Group, Morningstar offer personalized TDFs
Target Date Plus helps participants to determine a mix of target-date funds that is more suited to their particular needs.
Capital Group, parent of American Funds, and Morningstar’s workplace solutions group have developed a way for retirement plan participants to allocate their target-date fund investments to make them more personalized.
Called Target Date Plus, the service, which employers can use as a qualified default investment alternative, uses a participant’s age, salary, balance and total contribution rate to determine a mix of target-date funds that is more suited to their particular needs. Instead of being put into an American Funds 2060 target-date fund, for example, contributions by a 35-year-old participant might be allocated to a 2060 fund and a 2070 fund if a particular mix of the two offers a more appropriate asset allocation for their circumstances.
Morningstar Investment Management said it has designed a user interface for the service based on what it has learned from serving 1.7 million managed accounts users to enable investors to interact with the service and modify the required data points.
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