Franklin LifeSmart Retirement Target Funds seek to maximize outcomes at retirement, while actively and continuously managing risk. The funds’ managers continually evaluate each fund’s investments within its glide path and have the flexibility to make adjustments to manage risk and take advantage of current market opportunities.
Reasons to consider Franklin LifeSmart Retirement Target Funds
New Generation of Target Date Design
LifeSmart’s “to retirement” glide path focuses on helping participants seek a higher ending account value at retirement which can help improve retirement outcomes by supporting higher distributions.
Strategic Asset Allocation focuses on asset growth while also attempting to decrease risk exposure as participants near the target date.
- Pre-Retirement Years—focused on risk-adjusted returns with a goal of getting participants to retirement with a higher end portfolio value.
- At and In Retirement—exposure to fixed income is increased in an attempt to reduce risk, should market volatility occur, and to help preserve assets as participants enter retirement.
Tactical Asset Allocation provides flexibility to take advantage of short-term opportunities and help mitigate risk.
- Up to 10% tactical adjustment in equity and fixed income.
- Up to 5% tactical adjustment in alternative investments.
- Ability to move in and out of sub-asset classes.
LifeSmart’s Tactical Asset Allocation Allows for 0-10% Movement within each Asset Class
1. The fund may allocate between 0-10% to alternative funds. It is anticipated that pro-rata adjustments will be made to the fund’s equity and fixed income fund investment allocations to facilitate investments to alternative funds in amounts greater than or less than the target allocation of 5%.
A target date fund should not be selected based solely on age or retirement date. A target date fund is not a guaranteed investment and the fund’s stated asset allocations may be subject to change. Diversification does not guarantee a profit or protect against a loss. All investments involve risk, including possible loss of principal.
Navigating the Glide Paths
“You’re managing the portfolio that can be essentially from a person’s graduation party all the way through their retirement party,” says Thomas Nelson, SVP, Director of Investment Solutions, Franklin Templeton Solutions in his discussion on how glide paths have evolved and made improvements over the years.
Managed by Franklin Templeton Solutions — a team of more than 60 investment professionals with more than 20 years of experience managing multi-asset and multi-style portfolios.2
The LifeSmart funds have:
- 100+ investment vehicles available.
- Up to 20% allocation in Exchange Traded Funds (ETFs).
- Up to 10% allocation to Alternative Funds.
Active Management: Tactical, Not Disruptive
“We use ETFs to be tactical without being disruptive,” says Thomas Nelson, SVP, Director of Investment Solutions, Franklin Templeton Solutions in his discussion about the use of exchange traded funds prominence and the potential benefits of adding ETS to target date funds.
The Franklin Templeton Solutions team takes a proactive, risk-aware approach. This means that they contiunally and diligently research, test, and evaluate the fund’s underlying investments along with current market conditions. This approach, paired with a diversified set of investments, is intended to reduce overall volatility.
LifeSmart Funds Earn Top Quartile Rankings
Compared to its peers3, the LifeSmart Funds have been able to produce a higher return for less risk throughout the volatile market cycles encountered since 2006.
Prominent amongst Peers
“What tends to set us apart from our peers is twofold,” says Thomas Nelson, SVP, Director of Investment Solutions, Franklin Templeton Solutions, in his discussion about his team and what sets them apart from competitors.
Important Legal Information
The information provided is not a complete analysis of every material fact regarding any country, market, industry, security or fund. Because market and economic conditions are subject to change, comments, opinions and analyses are rendered as of July 13, 2015, and may change without notice. A portfolio manager’s assessment of a particular security, investment or strategy is not intended as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy; it is intended only to provide insight into the fund’s portfolio selection process. Holdings are subject to change.
Diversification does not guarantee a profit or protect against a loss.
Past performance does not guarantee future results.
What Are the Risks?
Franklin LifeSmart Retirement Target Funds
All investments involve risks, including possible loss of principal.
The investment risk of each retirement target fund changes over time as its asset allocation changes. Since each fund invests in underlying funds, which may engage in a variety of investment strategies involving certain risks, a Franklin LifeSmart Retirement Target Fund is subject to those same risks. Principal invested is not guaranteed at any time, including at or after each fund’s retirement target date; nor is there any guarantee that each fund will provide sufficient income at or through the investor’s retirement. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in each fund adjust to a rise in interest rates, each fund’s share price may decline. These and other risks are described more fully in each funds’ prospectus. Investors should consult their financial advisor for help selecting the appropriate fund of funds, or fund combination, based on an evaluation of their investment objectives, retirement time horizons and risk tolerance.
Your clients should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a prospectus, which contain this and other information. Your clients should read a prospectus carefully before they invest or send money.
2. There is no assurance that any solution or strategy will be successful, or that any client’s investment objective will be met.
3. Includes all Target Date funds listed on Morningstar in each respective fund category. © 2015 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Time period measured is September 1, 2006 - December 31, 2014. Fund name, rank/number of funds in category: 2015 Fund, 7/60 funds; 2025 Fund, 6/48 funds; 2035 Fund, 6/48 funds; 2045 Fund, 8/43 funds. Fund performance used within these rankings reflects certain fee waivers, without which fund returns and Morningstar rankings would have been lower.
Franklin Templeton Distributors, Inc.
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For financial advisors who are US residents only.