The Securities and Exchange Commission is conducting “investor testing” as part of its rulemaking efforts on target date funds, to help the agency assess “the types of information that investors believe are most useful when they choose their investments,” Eileen Rominger, director of the SEC’s Division of Investment Management, said Tuesday.
In 2010, the SEC proposed rule changes to address concerns regarding target date fund names and information presented in target date fund marketing materials, Rominger said in a speech before securities lawyers. To date, Rominger (left) continued, target date fund disclosures have been tested on about 1,000 investors.
“After we analyze the testing data and consider public comments on the proposed rule, the division will evaluate whether to recommend that the commission adopt rule changes to address target date funds,” she said.
As of October, assets in target date funds had reached approximately $360 billion, Rominger said. The new cash flow that target date funds netted in 2010, she said, was over 10 times what it was 10 years ago. She cited a recent survey that found that 70% of U.S. employers use target date funds as the default investment in their defined contribution plans.
“The increasing significance of target date funds in 401(k) retirement plans–together with the market losses suffered in 2008–gave rise to concerns about those funds.”