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Target-date portfolios are designed to help plan participants stay on track toward a successful retirement—by managing risk while seeking to benefit from market appreciation.
American Century One Choice® Target Date Portfolios (One Choice) pursue long-term wealth accumulation over a full market cycle. By emphasizing strong risk-adjusted performance, One Choice seeks to help more participants reach their retirement goals.
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A glide path illustrates how a target-date’s allocations to stocks and bonds change over time. As the target date approaches, the portfolio becomes more conservative as investors seek to minimize the potential for losses as retirement nears.
The higher a target-date’s equity allocation, the more participants benefit from a bull market—and the more they suffer when markets turn negative. So it’s critical to select the right glide path based on participant willingness to accept risk:
Source: American Century Investments.
A One Choice Target Date Portfolio's target date is the approximate year when investors plan to retire or start withdrawing their money. The principal value of the investment is not guaranteed at any time, including at the target date.
Each target-date One Choice Target Date Portfolio seeks the highest total return consistent with American Century Investments' proprietary asset mix. Over time, the asset mix and weightings are adjusted to be more conservative. In general, as the target year approaches, the portfolio's allocation becomes more conservative by decreasing the allocation to stocks and increasing the allocation to bonds and cash equivalents.
Check out our latest white paper to understand the impact of glide path design decisions on retirement outcomes.
The less an investment has to recover from losses, the more it can continue to compound wealth. That’s why One Choice focuses on defense: by seeking to reduce losses in down markets.
High-scoring returns during bull runs get the most cheers. But your most valuable players (MVPs) could be those that seek to provide some defense when the going gets rough. Since 2004, the stock market has declined by more than 10% in ten separate periods*, so it’s important to understand how an investment may respond to such a shock.
A Little Downside Protection Goes a Long Way
*Based on S&P 500® Index returns from 12/31/2004 through 6/30/2021. Source S&P.
We believe it’s important for investors to take risk into consideration when evaluating investment performance, so One Choice focuses on managing risk in pursuit of consistent risk-adjusted returns.
The Best Offense Is a Good Defense
Since the Financial Crisis, near-retirement investors in One Choice gained more wealth than others by losing less when markets suffered.
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Wealth Accumulation and Volatility Comparison of Near-Retirement Funds
Sources: American Century Investments, FactSet and Morningstar. Data as of 9/30/2021.
1 The Aggressive TDF is represented by John Hancock Multimanager 2015 Lifetime 1 Target-Date Fund.
2 The Conservative TDF is represented by the Wells Fargo Target 2015 R6 Target-Date Fund.
3 Represented by One Choice In Retirement Portfolio, Class I.
This hypothetical situation contains assumptions that are intended for illustrative purposes only and are not representative of the performance of any security. There is no assurance similar results can be achieved, and this information should not be relied upon as a specific recommendation to buy or sell securities.
Data presented reflects past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. To obtain performance data current to the most recent month end, please visit www.americancentury.com/performance. Investment return and share value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains.
See Additional Disclosure below for more information.
Inform your client conversations with perspectives on the market environment, the strategy’s performance, and the investment team’s outlook.
Today’s strong equity markets may mask thinly veiled risk, especially for those target-date strategies heavily weighted to equities.
Hear from CIO Rich Weiss about how One Choice Portfolios are managing risk in today’s markets.
Contact your Regional Retirement Specialist at 800-345-6488
An unexpected job loss or significant market downturn in the 15 years leading to retirement has the potential to throw off even the best-laid plans.
That’s because participants accumulate most of their wealth during this period. A sudden shock could jeopardize retirement savings plans just when participants have the most to lose.
See how glide path shape can play an important role in how participant portfolios respond to such shocks.
The chart below illustrates how wealth tends to grow over time. By the time investors reach the Transition Risk Zone, they often have more to lose if markets turn downward.
Average Net Worth by Age
Source: U.S. Federal Reserve, as of 2019.
Many participants target a specific age or date for retirement. Yet history has shown that actual retirement dates often occur earlier than planned. And they are often involuntary – such as loss of job due to company downsizing, health or disability, or the need to care for a family member. So it’s important for participants to consider the potential for unplanned early retirement as they save.
Source: 2020 Retirement Confidence Survey, Employee Benefit Research Institute and Greenwald & Associates.
Source: 2019 EBRI/Greenwald Retirement Confidence Survey.
An aggressive glide path generally features a higher allocation to stocks in the years leading to retirement. This gives it the potential to benefit from market appreciation when the stock market is strong, but it also means they could suffer greater losses when markets turn negative. A moderate glide path with a lower equity allocation in the Transition Risk Zone could be less vulnerable to a market downturn.
Download a hypothetical example of how glide path shape can affect retirement outcomes
How Much Risk is in the Transition Risk Zone?
Check out latest white paper to understand the impact that equity allocations can have on losses in the transition risk zone.
Plan populations differ in many ways, including objectives, demographics, and risk appetites. Selecting the right Qualified Default Investment Alternative (QDIA) for each plan is a critical decision for fiduciaries.
Target-Date Blueprint is an online tool designed to help you apply a prudent process to identify the right QDIA solution for each plan.
Use it to narrow the TDF universe to focus only on those whose investment profiles align with a plan’s demographics, risk appetite and preferences. Learn more about Target-Date Blueprint.
Read DOL Tips
View Sample Report
View Our Fiduciary Responsibility Resources
Check out our white paper from ERISA attorney Brad Campbell, who offers his thoughts on how to implement and document a prudent QDIA selection process that will pass scrutiny by regulators and plaintiffs' lawyers.
The addition of One Choice® Blend+ to the American Century Investments® family of target-date solutions expands our qualified default investment alternatives (QDIA) options to meet the needs of a wider range of retirement plans and participants.
It’s important for plan sponsors to recognize that participant retirement planning is
different than participant retirement reality.
Top ERISA attorney Brad Campbell offers his thoughts about how Target-Date Blueprint can help you implement and document DOL guidance on TDF selection.
Understanding the impact of design decisions on retirement outcomes.
Select the target year to view the asset mix based on your goal date.
As of 3/10/2021
The performance of the portfolios is dependent on the performance of their underlying American Century Investments' funds and will assume the risks associated with these funds. The risks will vary according to each portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
Diversification does not assure a profit nor does it protect against loss of principal.
Data through 9/30/2021. Returns greater than one year are annualized. Source: FactSet, Morningstar.
The gross expense ratio is the fund's total annual operating costs, expressed as a percentage of the fund's average net assets for a given time period. It is gross of any fee waivers or expense reimbursement. The net expense ratio is the expense ratio after the application of any waivers or reimbursement. This is the actual ratio that investors paid during the fund's most recent fiscal year. Please see the prospectus for more information.
Data presented reflects past performance. Past performance is no annual operating costs, expressed as a percentage of the fund’s average net assets for a given time period. It is gross of any fee waivers or expense reimbursement. The net expense ratio is the expense ratio after the application of any waivers or reimbursement. This is the actual ratio that investors paid during the fund’s most recent fiscal year. Please see the prospectus for more information. Returns or yields for the fund would be lower if a portion of the management fee had not been waived. The advisor expects this waiver to continue until November 30, 2021, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the prospectus report for the most current information. The net expense ratio for JH Multimanager 2015 Lifetime 1 reflects the effect of a contractual fee waiver and/or expense reimbursement in effect through 12/31/2021. For Wells Fargo Target 2015 R6 the manager has contractually agreed to fee waivers to the extent necessary to cap the fund’s total annual fund operating expenses after fee waivers at 0.14% for the R6 class. Please see each fund's respective prospectus for additional information.
AB The Fund seeks to approximate, before fees and expenses, the total return of the Dow Jones Target 2015 Index.
AJ The fund seeks high total return until the fund’s target retirement date, with a greater focus on income as the target date approaches.
H The fund seeks current income, with a secondary objective of capital appreciation.
All funds: Daily Liquidity. Principal not guaranteed. The tax consequences of owning shares of the funds will vary depending on whether you own them through a taxable or tax-deferred account. Tax consequences result from distributions by the funds of dividend and interest income they have received or capital gains they have generated through their investment activities. Tax consequences also may result when investors sell fund shares after the net asset value has increased or decreased. The fund’s prospectus contains this and other information and should be read carefully before investing.
International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.
Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline.
The lower rated securities in which the fund invests are subject to greater credit risk, default risk and liquidity risk.
The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for, investment, accounting, legal or tax advice.
Investment return and share value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains. Returns for periods less than one year are not annualized.
The Sharpe Ratio is a simple but useful risk-adjusted measure of returns, showing the amount of return (reward) earned per unit of risk from any asset with a risk component. The higher the Sharpe Ratio, the better, theoretically, the portfolio's risk-adjusted performance-portfolios with higher Sharpe Ratios tend to provide more return for the same amount of risk. The Sharpe Ratio is useful, but not perfect. It can be skewed by irregular return factors that can upset the standard deviation calculation, and it doesn't take into account the market risk (beta) exposure of the portfolio. View full glossary.
Standard deviation is a statistical measurement of variations from the average. In financial literature, it's often used to measure risk, when risk is measured or defined in terms of volatility. In general, more risk means more volatility, and more volatility means a higher standard deviation-there's more variation from the average of the data being measured. In this context, reducing risk means seeking lower standard deviation. View full glossary.