The new series, called the T. Rowe Price Target Retirement Funds, is designed to pursue an asset allocation strategy that promotes asset accumulation prior to retirement, while supporting income withdrawals over a moderate post-retirement horizon. As a result, the new series anticipates 42.5% of a fund’s assets being invested in equities at the named retirement date, compared to 55% for the firm’s existing Retirement Funds.
This suite will complement the firm’s existing lineup of Retirement Funds, which had $88.1 billion in assets as of March 31, 2013. The Target Retirement Funds are expected to be available to investors on August 22, 2013.
“Target-date funds have become the preferred vehicle for retirement investors,” said Jerome Clark, portfolio manager of T. Rowe Price target-date funds. “We have built a successful franchise of target-date funds that are designed to support their income needs throughout retirement. The new Target Retirement Funds will allow us to expand our offerings to meet the needs of other investors who may have different objectives.”
Both the Target Retirement Funds and the existing Retirement Funds are designed to balance the primary risks investors face in retirement—market, inflation and longevity risks—but the relative importance of these factors is weighed differently in the two series. The Target Retirement series uses a glide path that places a greater emphasis on reducing market risk relative to the other risks. The new funds were not designed for investors who intend to withdraw all or a significant portion of their assets immediately at or shortly after their retirement date.
The Target Retirement series leverages many of the characteristics that have contributed to the success of the existing Retirement Funds, including the same sector diversification within the stock and bond allocations and an identical underlying fund lineup.
A prospectus can be obtained by calling 1-800-541-8803 or by downloading one here.