Products April 20, 2009

Schwab Makes Target Funds Enhancements

April 20, 2009 (PLANSPONSOR.com) - Charles Schwab Investment Management, the asset management arm of the Charles Schwab Corporation, has announced strategic changes to its target-date mutual funds to enhance the portfolios and reduce expenses.
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According to a press release, enhancements to the Target Funds include:

  • Reducing expense ratios by an estimated 13 to 23 basis points;
  • Higher fixed income exposure beginning ten years from target date to help increase protection of principal and generate periodic income approaching and during retirement;
  • Adding third-party funds managed by third party investment managers for improved style diversification and access to additional asset classes;
  • Higher equity exposure in early years of funds, with the goal of building wealth before target date; and
  • Extending the “glide path” for an additional five years to continue 20 years after target retirement date.

“We conducted a strategic review of our Schwab Target Date mutual fund lineup to evaluate the best investment approach given market conditions and investors’ changing long-term expectations and current interest in more conservative investment options,” said Peter Crawford, senior vice president for investment management services, in the announcement.

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