The Securities and Exchange Commission is seeking comment on a recommendation by its Investor Advisory Committee (IAC) regarding disclosure by target date mutual funds. Additionally, the IAC has announced an agenda for their next meeting on April 10th beginning at 10:00 a.m. (EST), which includes remarks from Commissioners, the new Investor Advocate and a recommendation from the Investor as Purchaser Subcommittee regarding crowdfunding regulations. Public portions are webcast.
In 2010, the SEC proposed a rule that would require marketing materials for target date funds to include a graphical or tabular depiction of changes in the fund’s asset allocation over time, known as a fund’s “glide path.” Today, the SEC is reopening the comment period on its 2010 proposal to request comment on the committee’s recommendation that the SEC develop a glide path illustration based on a standardized measure of fund risk, which would replace or supplement what it previously proposed. Said SEC ChairMary Jo White,
I greatly appreciate the input of the Investor Advisory Committee on this important matter and I look forward to carefully considering comments received on the committee’s recommendation.
Target date funds are designed to make investing for retirement more convenient by automatically making changes over time to the fund’s allocation among different asset classes, such as stocks, bonds, and cash. Target date fund allocations typically become more weighted to bonds and cash as the targeted retirement date nears, and sometimes continue becoming more weighted to bonds and cash for a number of years after retirement.
The SEC’s target date fund proposal and today’s release are available on the SEC’s website. Members of the public will have 60 days to comment on the Investor Advisory Committee’s recommendation after the release is published in the Federal Register.
The Dodd-Frank Wall Street Reform and Consumer Protection Act established the Investor Advisory Committee to advise the SEC on regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace. The Dodd-Frank Act authorizes the committee to submit findings and recommendations for review and consideration by the Commission.