One Choice® Target Date Portfolios
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We believe target-date investments should focus on helping investors build wealth over the long haul rather than chasing performance in the short term.
One Choice Target Date Portfolios have done just that, by focusing on long-term growth with an emphasis on providing a smoother ride over a full market cycle. And we stayed true to this philosophy throughout the long bull market—even as other target-date providers added equity risk to their glide paths.
Read all about our balance of risks framework to see why we stay committed to our philosophy.
Why Does Glide Path Shape Matter?
A glide path illustrates how a target-date portfolio’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:
A glide path with a moderate equity allocation may lead to better outcomes for participants seeking to minimize large losses in pursuit of smoother returns.
An aggressive glide path could be better suited to participants who can withstand the risk of a downturn in pursuit of strong returns in bull markets.
Compare Glide Path Shapes
Source: American Century Investments.
The target date in a fund's name 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 fund 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.
Upside Potential of Managing the Downside
The less an investment has to recover from losses, the more it can continue to compound wealth. That’s why One Choice Target Date Portfolios focus on defense by seeking to reduce losses in down markets.
Remind your clients how defense can be the game changer.
Run Defense
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 more than 10% in 11 separate periods,* so it's important to understand how an investment may respond to such a shock.
See how One Choice Target Date Portfolios defended against these downturns compared to peers. Download A Little Downside Protection Goes a Long Way
*Based on S&P 500® Index returns from 12/31/2004 through 12/31/2023. Source Standard & Poor's.
Emphasize Risk Management
We believe it’s important for investors to take risk into consideration when evaluating investment performance, so One Choice Target Date Portfolios focus on managing risk in pursuit of consistent risk-adjusted returns.
Learn how One Choice Target Date Portfolios' risk-adjusted returns and volatility have stacked up versus the peer group. Download The Best Offense Is a Good Defense
Stay in the Game
A Flatter Glide Path Has Helped Near-Retirees Gain More Wealth
Since the Great Financial Crisis, investors nearing retirement in One Choice Target Date Portfolios have gained more wealth than others.
Source: American Century Investments, FactSet and Morningstar. Data as of 3/31/2024.
¹The Aggressive Target Date Fund (TDF) is represented by American Funds 2015 Target Date Retire R5 Fund.
²Represented by One Choice In Retirement Portfolio, Class I.
The chosen vintage represents each product’s respective glide path over the course of its accumulation and decumulation years. One Choice Target Date In Retirement Portfolio features a lower equity allocation than the American Funds 2015 Target Date Portfolio at every point of the glide path up until the intended retirement date, at which point it begins to de-risk at a slower rate.
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 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.
Hear Straight Talk from the Investment Team
Weekly Updates from Rich Weiss, CIO
Every Monday, American Century Investments hosts a call with CIO Rich Weiss, where he addresses the latest news—offering his insights and color commentary on the economy, markets and portfolio positioning.
Retirement Transition Risk: Prepare for the Unexpected
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.
Wealth Accumulation
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 2022.
Early Retirement Risk
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.
Almost half of retirees stopped working earlier than planned.
Source: 2020 Retirement Confidence Survey, Employee Benefit Research Institute and Greenwald & Associates.
Many stopped working involuntarily.
Source: 2022 EBRI/Greenwald Retirement Confidence Survey.
Glide Path Transition Risk
Higher Equity Allocations May Increase Losses in the Transition Risk Zone
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 investors 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.
How Much Risk Is in the Transition Risk Zone?
Source: American Century Investments.
Download a hypothetical example of how glide path shape can affect retirement outcomes.
Target-Date Blueprint: Align QDIA Selection With Each Plan’s Profile
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.
Understand the Department of Labor's guidance on target-date selection.
Help retirement clients thrive in their fiduciary roles.
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.
Additional Disclosures:
Target-Date Fund | Fund Ticker | Net Expense Ratio % | Gross Expense Ratio % | 3-yr Standard Deviation % | 1-yr Return % | 5-yr Return % | 10-yr Return % | Inception Date |
---|---|---|---|---|---|---|---|---|
American Century One Choice® In Retirement I | ATTIX | 0.55 | 0.61 | 9.85 | 10.02 | 5.52 | 4.99 | 8/31/2004 |
American Funds 2015 Target Date Retire R5 | REJTX | 0.35 | 0.35 | 9.44 | 9.66 | 5.76 | 5.46 | 2/1/2007 |
Data through 3/31/2024. Returns greater than one year are annualized. Source: FactSet, Morningstar.
Data reflects past performance. Past performance is no guarantee of future results.
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.
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, 2024, 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.
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.