Life cycle funds update - November 2005
See our most recent update
As reported in our November 2005
Newsletter, Life Cycle or Target Date funds are new in Canada for 2005.
Here is a table summarizing the first four widely available offerings.
| Inception Date |
November-05 |
February-05 |
July-05 |
June-05 |
| Portfolios |
2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045 |
2010, 2015, 2020, 2025 |
2010, 2020, 2030 |
Conservative and Aggressive versions 2010, 2015, 2020, 2030 |
| Minimum |
$500 |
$500 |
$5,000 |
$5,000 |
| Illustration (.pdf or site) |
 |
 |
 |
 |
| Invests In: |
16 Fidelity Funds, Diversified by style, asset and
manager |
1 ABN Ambro Global Equity Exposure (leveraged) Fund, Gov"t Bonds |
5 Funds, Diversified by style, asset and manager |
14-15 Scotia Funds, Diversified by style, asset and
manager |
| Allocation Shifts |
Non-Linear Dynamic Rolldown from Equity to bonds |
Passive bond component increases with each "target click" - non linear |
Linear, fixed income increases regularly |
Linear, fixed income increases regularly,
Consultant: Ibbotson Associates |
| Guaranteed Maturity Value |
No |
Yes - based on last "click" |
No |
No |
| Management Fees |
Declines from 2.35% to 1.6% |
Declines from 2.6% to 1.15% |
2.10% |
Declines from 2.05% to 1.6% |
| Rebalancing |
Daily if variance +/-3% |
Annually |
If variance +/-2.5% |
|
| Rollover Event |
Into Fidelity Clearpath Income Portfolio 10 years after Maturity |
Client receives highest month end NAV, MER at lowest point, max fixed income |
Fixed Asset Allocation 20 years after target date. |
Into Scotia Money Market fund 1 year after maturity |
| Features |
More dates and underlying diversification |
"Click" feature increases guaranteed value each time month end NAV increases |
|
Two versions of each fund, aggressive has 10% more equity |
| More Information |
Fidelity
Clearpath Site |
Clarington
Target Click Site |
Russell
Life Points Site |
Scotiabank
Vision Funds Site |
(Note, RBC Education Funds are no longer available, and Ethical Funds recently
announced a similar product. We'll update this site with information in
the future.)
Each of the funds has strengths and the overall concept is very good.
We like the idea of the guarantee on the Clarington funds, but until the
ownership and future for the Clarington group is finalized, we will hold off on
that recommendation.
For now, the Fidelity funds seem to be the best choice. This is a
conclusion based on the above analysis, but even more so based on the solid
track record of the one of the largest funds in Canada, a fund we have been
recommending for years, the Fidelity Canadian Asset Allocation
fund. This fund (along with others in the US) seems to demonstrate
Fidelity's strength in the Asset Allocation field.
Please contact us
to review the appropriate Target Date fund for your situation. This table
compiled by Carl Spiess, Director, Wealth Management, ScotiaMcLeod, based
on information provided by the fund companies at time of writing.
|
