Client Alert
SEC Proposes New Advertising Disclosure Requirements for Target-Date Funds
June 29, 2010
The Investment Management Practice
The Securities and Exchange Commission (SEC) has proposed new advertising and sales literature disclosure requirements for target-date funds. These proposed disclosure requirements are a reaction to concerns relating to shareholder understanding of the risks associated with, and the differences among, target-date funds. These concerns have arisen as the result of the performance of certain target-date funds during the 2008-2009 market downturn.
These enhanced disclosure requirements would require target-date funds that include the target date in their name to disclose, immediately adjacent to the funds name, the funds asset allocation at the target date. The proposed rules would also require all target-date fund marketing materials to prominently disclose other information such as a table or graph of the funds asset allocation (or glide path) over time with a highlight of the funds final asset allocation, as well as other information discussed below.
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