SAN FRANCISCO--(BUSINESS WIRE)--
Target date funds vary widely in their approach, making it all the more
critical that retirement plan sponsors and advisors monitor them
regularly to confirm they are performing as expected. This can be
particularly difficult with these types of funds because they vary with
respect to their investment strategies, glide paths, and performance in
different market environments. Wells Fargo Advantage Funds offers
a three-step process that can help.
When it comes to evaluating target date fund performance, the default
has typically been to compare a fund's total return to that of other
funds in its peer group since these rankings are readily available.
However, these simple rankings do not account for different asset
allocations and risk levels between funds in the same peer group.
In a recently published white paper, Wells Fargo Advantage Funds
outlines a methodology it believes to be more effective in evaluating
target date fund performance, an approach that is based on both absolute
and risk-adjusted measures.
Roadmap for Evaluating Target Date Fund Performanceprovides
a three-step monitoring process intended to be comprehensive yet
"Three steps and five statistics form the basis of our approach to a
more accurate evaluation of target date fund performance," said Jim
Lauder, CEO of Global Index Advisors, Inc., the subadvisor for Wells
Fargo Advantage Funds' suite of target date funds. "Given the focus
on fiduciary duty and the prominence of target date funds in retirement
plans, it's imperative that plan sponsors have a, supportable measure of
performance, one that incorporates risk as well as returns. Our roadmap
is consistent and relatively easy to implement, in spite of the
complexity of target date funds."
Financial professionals and plan sponsors can obtain a copy of A
Roadmap for Evaluating Target Date Fund Performance by visiting www.wellsfargoadvantagefunds.com/roadmap.
About Wells Fargo Funds Management
Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells
Fargo & Company, provides investment advisory and administrative
services for Wells Fargo Advantage Funds. Other affiliates of
Wells Fargo & Company provide subadvisory and other services for the
funds. The funds are distributed by Wells Fargo Funds Distributor, LLC,
Member FINRA/SIPC, an affiliate of Wells Fargo & Company.
The target date represents the year in which investors may likely begin
withdrawing assets. The funds gradually seek to reduce market risk as
the target date approaches and after it arrives by decreasing equity
exposure and increasing fixed-income exposure. The principal value is
not guaranteed at any time, including at the target date.
Stock values fluctuate in response to the activities of individual
companies and general market and economic conditions. Bond values
fluctuate in response to the financial condition of individual issuers,
general market and economic conditions, and changes in interest rates.
In general, when interest rates rise, bond values fall and investors may
lose principal value. The use of derivatives may reduce returns and/or
increase volatility. Certain investment strategies tend to increase the
total risk of an investment (relative to the broader market). This fund
is exposed to foreign investment risk, mortgage- and asset-backed
securities risk, smaller-company investment risk, and allocation
methodology risk (risk that the allocation methodology of the Dow Jones
Target Date Index, whose total returns the fund seeks to approximate,
before fees and expenses, will not meet an investor's goals). Consult
the fund's prospectus for additional information on these and other
"Dow Jones®" and "Dow Jones Target Date IndexesSM"
are service marks of Dow Jones Trademark Holdings LLC (Dow Jones); have
been licensed to CME Group Index Services LLC (CME Indexes); and have
been sublicensed for use for certain purposes by Global Index Advisors,
Inc., and Wells Fargo Funds Management, LLC. The Wells Fargo
Advantage Dow Jones Target Date FundsSM, based on the Dow
Jones Target Date Indexes, are not sponsored, endorsed, sold, or
promoted by Dow Jones, CME Indexes, or their respective affiliates, and
none of them makes any representation regarding the advisability of
investing in such product(s).
Carefully consider a fund's investment objectives, risks, charges,
and expenses before investing. For a current prospectus and, if
available, a summary prospectus, containing this and other information,
Read it carefully before investing.
227465 - 0814
NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Source: Wells Fargo Funds Management, LLC