Investing November 14, 2019
AB Closing Mutual Fund TDF Series
"We will be reaching out to plan sponsors about our target-date CIT series,” Jennifer Delong, head of defined contribution at AllianceBernstein, tells PLANSPONSOR.
Reported by Lee Barney
AllianceBernstein (AB) has decided to close its mutual fund target-date series, the AB Multi-Manager Select Retirement Funds, due to the growing popularity and lower costs of its collective investment trust (CIT) target-date series, the AB Multi-Manager Retirement Trust, Jennifer Delong, head of defined contribution at AllianceBernstein, tells PLANSPONSOR.
The funds will be closed as of June 25, 2020, Delong says. Investors may continue to make contributions to them up until that time, she says. “We are giving a long lead time to plan sponsors and advisers so that they can think about what they want to do. We will be reaching out to plan sponsors about our target-date CIT series.”
Both the mutual fund and CIT target-date series “are the same design, with a 60/40 mix of active and passive funds and Morningstar as the subadviser,” Delong says. She says that CITs’ market share of target-date fund assets has grown from 19% in 2012 to 39% in 2018. Because of the tremendous growth in CITs in target-date funds and their lower costs, “we believe the focus should be on CITs,” Delong says. “We really have seen a tremendous growth in CITs as retirement plan advisers learn about their benefits.”
Delong points out that AB’s CIT target-date series is now available to plan sponsors of all sizes, through a partnership with Wilmington Trust. The firm has also eliminated asset minimums for the funds.
The funds will be closed as of June 25, 2020, Delong says. Investors may continue to make contributions to them up until that time, she says. “We are giving a long lead time to plan sponsors and advisers so that they can think about what they want to do. We will be reaching out to plan sponsors about our target-date CIT series.”
Both the mutual fund and CIT target-date series “are the same design, with a 60/40 mix of active and passive funds and Morningstar as the subadviser,” Delong says. She says that CITs’ market share of target-date fund assets has grown from 19% in 2012 to 39% in 2018. Because of the tremendous growth in CITs in target-date funds and their lower costs, “we believe the focus should be on CITs,” Delong says. “We really have seen a tremendous growth in CITs as retirement plan advisers learn about their benefits.”
Delong points out that AB’s CIT target-date series is now available to plan sponsors of all sizes, through a partnership with Wilmington Trust. The firm has also eliminated asset minimums for the funds.
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