PGIM launches three Retirement Spending Funds for personalized spending goals
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Insights
The introduction of the PGIM Retirement Spending Funds by Prudential's PGIM represents a significant move within the investment management sector. These funds are tailored to address the specific needs of retirees, who require a delicate balance between income generation and capital preservation. The creation of funds that cater to varying risk tolerances and spending requirements indicates a strategic response to demographic shifts, such as the aging population and the increasing number of individuals entering retirement.
From a financial perspective, these funds may attract a substantial influx of assets under management (AUM) due to the targeted demographic's size and the increasing demand for retirement income solutions. The funds' performance will likely be scrutinized for their ability to deliver on their promise of balancing growth and conservation, which is a challenging task given the low-interest-rate environment and market volatility. For investors, the diversification across fixed income, equity, real assets and alternatives could offer a hedge against inflation and market downturns, potentially leading to a more stable income stream in retirement.
The launch of PGIM's retirement-focused funds can be seen as a forward-thinking approach to retirement planning. These funds aim to simplify the investment process for retirees by providing a pre-packaged solution that aligns with their spending goals. The 'fund of funds' structure allows for a diversified investment strategy, which is important for retirees who cannot afford to take on excessive risk. By offering different levels of risk tolerance—conservative, moderate and enhanced—PGIM is acknowledging the diversity in retirees' financial situations and spending needs.
However, potential investors should consider the fees associated with 'fund of funds' investments, as they can be higher due to the layered management structure. Additionally, the success of these funds will depend on PGIM's ability to effectively manage the asset allocation to adapt to changing market conditions while maintaining the desired level of income for retirees. It's also essential for retirees to understand that these funds are not a one-size-fits-all solution and should be evaluated within the context of their overall retirement strategy, including social security benefits, other retirement accounts and personal savings.
PGIM's launch of the Retirement Spending Funds reflects a broader industry trend of asset managers developing products that cater to the evolving needs of the retirement market. The demand for retirement income solutions is growing as the baby boomer generation retires and younger generations seek more dynamic retirement planning tools. These funds may set a precedent for other investment firms to follow, potentially leading to increased competition and innovation within the retirement product space.
Market research data suggests that personalization in financial products is a key driver of customer satisfaction and loyalty. PGIM's personalized approach, with three distinct funds, could resonate well with investors who are looking for tailored solutions. In terms of market impact, the performance of these funds and their reception by the public could influence stock market dynamics, particularly within the financial sector, as it may lead to shifts in AUM and investor preferences. Monitoring the uptake and success of these funds will be important for understanding future trends in retirement planning and investment management.
Suite of three Funds seeks to help
Jeremy Stempien, Portfolio Manager and Strategist, PGIM DC Solutions (Photo: Business Wire)
The suite of Funds seeks to strike a unique balance between growth and conservation of capital with consideration for the specific risks faced by retirees. The Funds, subadvised by PGIM DC Solutions, are each “fund of funds” investing primarily in a range of fixed income, equity, real asset and alternative mutual funds and ETFs.
“An individual’s investment needs and spending goals at or near retirement are entirely unique to their circumstances. The PGIM Retirement Spending Funds offer three distinct portfolios to address these differences, providing a more personalized approach and thoughtful asset allocation mix to help meet varying income needs,” said Jeremy Stempien, co-portfolio manager of the PGIM Retirement Spending Funds and the PGIM Target Date Funds.
For more information on the Funds, visit the fund detail pages:
PGIM Conservative Retirement Spending Fund
PGIM Moderate Retirement Spending Fund
PGIM Enhanced Retirement Spending Fund
ABOUT PGIM DC SOLUTIONS
As the retirement solutions provider of PGIM, PGIM DC Solutions LLC seeks to deliver innovative defined contribution solutions founded on market leading research and capabilities. Our highly experienced team partners with clients on customized solutions to solve for retirement income. PGIM DC Solutions aims to help investors achieve their retirement goals through their suite of PGIM RetireWell™ Solutions, which includes target date portfolios, retirement income strategies and financial wellness resources.
ABOUT PGIM INVESTMENTS
PGIM Investments LLC and its affiliates offer more than 100 funds globally across a broad spectrum of asset classes and investment styles. All products draw on PGIM’s globally diversified investment platform that encompasses the expertise of managers across fixed income, equities, alternatives, and real estate.
ABOUT PGIM
PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), is a global investment manager with
Prudential Financial, Inc. (PFI) of
1 The term PGIM as used in this announcement includes PGIM Investments LLC and PGIM DC Solutions LLC, both of which are affiliates of PGIM, Inc., an indirect, wholly owned subsidiary of Prudential Financial, Inc.
PGIM DC Solutions aims to help participants achieve their retirement goals through their suite of “PGIM RetireWell™” solutions. These solutions may include a range of investment options including target date portfolios, retirement income strategies, and managed accounts that can be coupled with our proprietary advice engine. There is no guarantee that investment or retirement goals will be achieved. Use of the term “RetireWell” and any related phrase is not intended to indicate that such goals will be achieved.
Risks—Risks of investing in the funds include but are not limited to the following: Equity and equity-related securities may be subject to changes in value, and their values may be more volatile than those of other asset classes. Fixed Income investments are subject to credit, market, prepayment and interest rate risks, and their value will decline as interest rates rise. As a “fund of funds”, the funds are subject to the performance and risks of the underlying funds and their investments. Small- and mid-cap investments may be subject to more erratic market movements than large-cap stocks. Mortgage-backed and asset-backed securities tend to increase in value less than other debt securities when interest rates decline but are subject to a similar risk of decline in market value during periods of rising interest rates. Investing in real estate poses certain risks related to overall and specific economic conditions as well as risks related to individual property, credit and interest rate fluctuations. Asset allocations to underperforming or volatile asset classes or other changes in asset allocations could lead to increased volatility in the Fund’s portfolio. The Funds’ manager serves as the manager of the underlying affiliated funds, and a conflict of interest could affect how the manager and subadvisors fulfill their fiduciary duties to the Fund and the underlying funds. There is no guarantee the Fund's objective will be achieved. Risks are more fully explained in the fund's prospectus.
Consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about each fund. Contact your financial professional for a prospectus and summary prospectus. Read them carefully before investing.
Investment products are distributed by Prudential Investment Management Services LLC, member FINRA and SIPC. PGIM Investments is a registered investment advisor and investment manager to all PGIM
Investment Products: Are not insured by the FDIC or any federal government agency | May lose value | Are not a deposit of or guaranteed by any bank or any bank affiliate.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact a financial professional.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240403144593/en/
MEDIA
Kylie Scott
+1 973 902 2503
kylie.scott@pgim.com
Source: PGIM
FAQ
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