With a focus on meeting the income needs of participants, target date portfolios aim to provide participants with income for 30 years beyond retirement. The target date portfolios seek to solve for the right risks at the right time to achieve better retirement outcomes for defined contribution plan participants. Target date portfolios are available in multiple vehicle structures and share classes to address a variety of plan needs.
A DIFFERENTIATED GLIDEPATH
The three-stage glidepath, designed with the intent to help improve retirement outcomes by solving for the right risks at the right time, addresses the key risks that pose the greatest challenges to an individual's retirement over their lifetime:
- Not taking enough risk in order to accumulate assets early in an individual’s career
- Protecting those assets against substantial market drawdowns as individuals transition toward retirement
- Preserving the purchasing power of their assets from the eroding effects of inflation during the retirement years
COST-EFFECTIVE APPROACH TO RETIREMENT
Target date portfolios are available in cost efficient vehicle structures, combining both passive and actively managed strategies. Their active/passive design adds value in areas where greater alpha opportunities exist and helps to reduce overall costs.
DIVERSIFICATION WITH A PURPOSE
The target date portfolios invest in a combination of equity, fixed income, and non-traditional asset classes.
For illustrative purposes only. Asset classes may change over time.
PGIM AT A GLANCE
For Professional Investors only. All investments involve risk, including the possible loss of capital. Returns may increase or decrease as a result of currency fluctuations.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation.
The target date is the approximate year in which investors plan to retire. The target date portfolios are designed for investors who plan to gradually withdraw assets from the fund over a moderate time period following retirement. Each portfolio invests in underlying portfolios that provide exposure to fixed income, equity and non-traditional asset classes. Each of these asset classes has its own risks that should be reviewed. The asset allocation of the target date portfolios will become more conservative as the target date approaches and for ten years after the target date by lessening the equity exposure and increasing the exposure in fixed income investments. The principal value of an investment in a target date portfolio is not guaranteed at any time, including the target date. There is no guarantee that the portfolio will provide adequate income through retirement.
A target date portfolio should not be selected solely based on age or retirement date. Before investing, participants should carefully consider the portfolio’s investment objectives, risks, charges and expenses, as well as their age, anticipated retirement date, risk tolerance, other investments owned, and planned withdrawals.
The stated asset allocation may be subject to change. It is possible to lose money in a target date portfolio, including losses near and following retirement. These risks may be increased to the extent investors begin to make withdrawals from the fund significantly before the target date.
Investments in the target date portfolios are not deposits or obligations of any bank and are not insured or guaranteed by any governmental agency or instrumentality. For investors close to or in retirement, the portfolio’s equity exposure may result in investment volatility that could reduce an investor’s available retirement assets when they are needed. For investors farther from retirement, there is a risk that a portfolio may invest too much in investments designed to ensure capital conservation and/or current income, which may prevent the investor from meeting his/her retirement goals.