T. Rowe Price has filed prospectus supplements with the Securities and Exchange Commission (SEC) to lower fees on its existing target date portfolios—and announced plans to expand its TDF lineup.
While the expense reductions vary depending on the specific product type and vintage, overall, the resulting asset-weighted average fee reduction (based upon assets under management as of March 31, 2021) is 6.3 basis points across mutual funds and 4.8 basis points across trusts.
According to a May 24 press release, the expense reductions follow the firm’s establishment last April of a new unitary fee structure for all target date mutual funds, in which an all-inclusive management fee rate was set at the top level. As part of that restructuring, fees were reduced across the Retirement I Funds—I Class, Target Funds, and Retirement Income 2020 Fund.
The firm says that the unitary fee structure for the target date mutual funds will remain in place and will reflect the updated fees beginning July 1, 2021, and that this top-down fee structure has enabled the firm to lower target date mutual fund fees without making underlying fund or allocation changes.
The overall investment approach and benchmarks for the Retirement and Target series remain unchanged.
Retirement Blend Funds
The new Retirement Blend Fund series expands T. Rowe Price’s target date lineup, combining active and passive styles in selecting underlying investments. According to the firm, the Retirement Blend strategy has been in place at T. Rowe Price since 2018 but was previously only available in the collective investment trust (CIT) format. This mutual fund series will extend the Retirement Blend approach to a wider range of investors for whom a mutual fund is the preferred or most appropriate investment vehicle.
According to the firm, the Retirement Blend Funds will utilize the enhanced retirement glide path and the same diversification, and tactical asset allocation as the Retirement suite.
T. Rowe Price recently announced that its target date portfolios are undergoing a gradual transition to their enhanced glide paths; this transition began in April 2020 and is expected to take approximately two years to complete for all funds and trusts. Neither the Retirement Blend Funds launch nor the fee changes affect this transition process.
All of T. Rowe Price’s target date portfolios will continue to be managed by the same accomplished portfolio management team: Wyatt Lee, CFA, head of Target Date Strategies, and portfolio managers Kimberly DeDominicis and Andrew Jacobs van Merlen, CFA.
