The U.S. Securities and Exchange Commission (SEC) is considering a new standard way for target date mutual funds to disclose their planned asset allocation shifts.
The SEC is seeking comment on a proposal from its Investor Advisory Committee (IAC) that the regulator should develop an illustration of the so-called “glide path” employed by target date funds to explain how a fund’s asset allocation will change over time. These funds typically shift their asset allocation toward bonds and cash, and away from equities, as the targeted retirement date approaches.
Back in 2010, the SEC proposed a rule that would require target date funds to include a graphical or tabular depiction of their “glide path.” It is now reopening the comment period on that proposal following the IAC’s recommendation that the SEC develop an illustration based on a standardized measure of fund risk.
“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,” said SEC chair, Mary Jo White. The proposal is out for a 60-day comment period.