News | 11.08.19
SEC Calls Out Conflicts of Interest in TDFs
The SEC's Office of Compliance Inspections and Examinations has issued an alert saying some target date funds (TDFs) provided "incomplete and potentially misleading disclosures" around conflicts of interest, such as those that could arise from "the use of affiliated funds and affiliated investment advisors." At the end of last year, 95 percent of TDF assets were held in funds that used only proprietary funds, according to Sway Research. The result is that when 401(k) investors direct money to TDFs sponsored by companies, they are directing money to those companies' other mutual funds. The SEC also said TDF providers offer incomplete or misleading disclosures around asset allocations (both current and prospective over time), relative to glide-path changes and the impact of these changes on asset allocation.
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