What are the investor safeguards in target date funds?
Target date funds that are mutual funds include several layers of investor safeguards. Like all mutual funds, target date mutual funds are subject to regulatory and disclosure requirements under the federal securities laws, including the Investment Company Act of 1940, which imposes significant requirements on the organization and operation of mutual funds and imposes fiduciary duties on mutual fund boards of directors and their advisers. Target date funds often operate as funds of funds—funds that invest in other mutual funds—which must meet additional, strict requirements under the 1940 Act. Disclosure is one key safeguard. Target date mutual funds explain their asset allocation approaches and glide paths in disclosure documents required by the Securities and Exchange Commission (SEC). Fund advertising materials intended for retail investors are reviewed by the Financial Industry Regulatory Authority (FINRA). Fund advertising materials also must comply with SEC and FINRA requirements
