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Fidelity to Launch Series of Low-Cost Target-Date Funds

March 6, 2009
Related Topics: Financial Impact, Benefit Design and Communication, Retirement/Pensions, Latest News
Fidelity Investments has filed with the Securities and Exchange Commission to launch a new series of target-date funds that will be available to certain 401(k) plan customers at below retail cost.

“The Fidelity Freedom K funds will be very similar to the retail Freedom Funds and made available to certain retirement plans for which Fidelity provides record-keeping services,” said Fidelity spokeswoman Sophie Launay.

Expected to be launched in July, the series of 12 funds will be offered in five-year increments ranging from 2000 to 2050.

The expense ratio is projected to be between 0.37 percent and 0.58 percent. “On average, that is [0.14 percent] lower than the retail Freedom Funds,” Launay said.

Employer-sponsored plans have been focusing on cost.

“The group retirement market has been moving toward broader use of institutionally priced investments,” Launay said. “Adding this lower cost of Freedom Funds should offer them additional pricing flexibility.”

The funds will be co-managed by Jonathan Shelon and Christopher Sharpe, who currently manage the firm’s retail Fidelity Freedom Funds lineup.

The retail Fidelity Freedom Funds series was launched in 1996.

Filed by Sue Asci of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.

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