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Schwab's Target-Date Retirement Funds Continue Strong Growth with Assets up 50 Percent in 2007
As more retirement plan sponsors and participants look to target-date retirement funds for ease of use, diversification and ready-made asset allocation, Charles Schwab announced that assets in its Schwab Managed Retirement Trust Funds(TM), have exceeded $2 billion. Introduced in 2002, the Schwab Managed Retirement Trust Funds are collective trust funds managed and distributed by The Charles Schwab Trust Company (CSTC) and designed specifically for investment by retirement plan participants.
Each Schwab Managed Retirement Trust Fund is a comprehensive portfolio diversified across asset classes and supported by relationships with more than a dozen independent sub-advisory firms. This industry-leading open-architecture approach enables Schwab to manage the funds using investment advice from sub-advisors in each asset class, unlike other target-date retirement funds that rely on a single investment firm for an entire portfolio. The use of sub-advisors gives Schwab the flexibility to replace underperforming managers and can increase the comfort level of plan sponsors who prefer a multiple manager strategy, as opposed to relying solely on one. In addition, the funds' collective trust structure helps keep costs low, another key benefit for investors.
"More than 60 percent of Schwab Retirement Plan Services clients are offering target-date funds to their participants, and employers are telling us that they choose these funds because of their strong performance as compared to employees going it alone and selecting their own fund lineup," said John Sturiale, investment officer for the Schwab Managed Retirement Trust Funds. "The passing of the Pension Protection Act last summer is also causing employers to use these funds as the default investment for the growing number of their employees who are automatically enrolled into retirement plans."
In addition to showing strong growth with Schwab's retirement plan client base and through its Third-Party Administrator partnerships, the Schwab Managed Retirement Trust Funds have also displayed growth among plans not currently on Schwab's retirement platform that trade through the National Securities Clearing Corporation (NSCC).
The funds are tied to target retirement dates in ten-year increments from 2010 to 2050. The investment allocations in the funds become more conservative over time, reaching 40 percent equity and 60 percent fixed income at each of the target dates, with the goal of balancing risk and return. The funds continue to become more conservative for 20 years beyond the target retirement dates. Once they reach 25 percent stock and 75 percent fixed income allocations, the allocations no longer change. At that time, the target-date funds merge with the Schwab Managed Retirement Trust Fund-Income, which has a fixed allocation of 75 percent bonds and stable value, and 25 percent stocks, and is designed to provide income during retirement.
Charles Schwab Corporation (NASDAQ:SCHW)
For more information about the funds, visit http://www.cstcfunds.com/.

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