Asset Allocation: Strategies
Most investors understand the need to diversify their investments, but don't have the time or knowledge to do it on their own. Since studies show that asset allocation is one of the factors with the greatest impact on investment portfolio results, many investors seek expert help in achieving an appropriate asset mix.
Investment companies have developed a variety of asset allocation products to meet this need. One of the most common and comprehensive forms of these is a "fund-of-funds"; that is, a mutual fund made up of shares of other mutual funds that provide asset class diversification. You may have heard these funds referred to by such names such as:
- Lifestyle, Life Stage, or Lifecycle Funds
- Target-date funds
- Target-risk funds
Whatever you call them, hundreds exist in the marketplace, and it is important to know that they are not all created equal. Their strategies and investment processes may be quite different.
Target-Risk (Lifestyle) Solutions: Principal Strategic Asset Management (SAM) Portfolios
Target-risk portfolios tailor a solution to the client's investment profile, by taking into consideration his or her goals, risk tolerance, and time horizon. The Principal Strategic Asset Management Portfolios are five target-risk solutions that are continually monitored and reallocated in response to changing economic and investment conditions. Learn more
Target-Date Solutions: Principal LifeTime Funds
Target-date funds are geared toward a specific date, most often the year you expect to retire. With the Principal LifeTime Funds you can choose among six different funds by simply selecting the target date that most closely matches your time horizon. Allocations are set by experts and regularly adjusted by experienced professionals. Learn more
Our target-date funds invest in underlying Principal Funds and each is managed toward a particular target (retirement) date, or the approximate date the participant or investor starts withdrawing money. As each of our target-date funds approaches its target date, the investment mix becomes more conservative by increasing exposure to generally more conservative investment options and reducing exposure to typically more aggressive investment options. The target-date fund's portfolio continues to be managed for approximately 15 years beyond the original target date. Our target-date funds assume the value of the investor's account will be withdrawn gradually during retirement. Neither the principal nor the underlying assets of our target-date funds are guaranteed at any time, including the target date, and investment risk remains at all times.
To obtain a prospectus, download online or call Customer Service at 1.800.222.5852
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.
A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.
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Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., member of the Principal Financial Group®. Principal Funds Distributor, Principal Shareholder Services, Principal Management Corporation and its affiliates, and Principal Funds, Inc. are collectively referred to as Principal Funds.
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