MINNEAPOLIS — Ameriprise Retirement Services believes in target-date asset allocation funds for 401(k) plans, although it took its time, according to Ward Armstrong, president.
"The marketplace and participants have spoken," he said.
This month, the retirement subsidiary of Ameriprise Financial Inc. will launch a suite of eight funds, the RiverSource Retirement Plus Series, with retirement dates from 2010 through 2045. RiverSource Investments LLC is Ameriprise Financial's mutual fund subsidiary.
According to the Employee Benefit Research Institute, Washington, asset allocation funds held $103 billion in assets as of Dec. 31.
Defined contribution providers have jumped on the lifecycle fund bandwagon in the past few years, but Ameriprise waited to launch its own series of funds until it did enough research on the options, Mr. Armstrong said. "In evaluating target maturity funds, entrants didn't spend the proper amount of time to provide a meaningful investment approach. Many funds were just slapped together with existing mutual funds," he said.
"Trying to make it simpler for participants is behind why these funds are more successful" than traditional balanced funds and risk-based lifestyle fund options, he said.
Mr. Armstrong said Ameriprise's three pronged approach to its asset allocation fund strategy — equity holdings, active management and quantitative/risk controlled management — will make the funds stand out among competitors, including The Vanguard Group, Malvern, Pa., and Fidelity Investments, Boston.