Latest news with #JasonKephart
Yahoo
10 hours ago
- Business
- Yahoo
Why target-date funds are great IRA investments
Why do target-date funds make ideal IRA investments? Here to discuss this topic is Jason Kephart, a senior principal with Morningstar's manager research team. The interview has been edited for length and clarity. Q: Target-date funds tend to be great investments for an IRA, because if investors choose the target-date fund that fits their time horizon, then that IRA effortlessly fits in with the rest of a portfolio. Delve into that. A: Target-date funds are a great set-it-and-forget-it for investors who don't want to spend a lot of time thinking about: How much of my portfolio should be in stocks versus bonds? What funds should I pick to fill those buckets?The target date takes all that off the hands of investors. The other beauty is regular rebalancing, so your portfolio doesn't get out of whack. As you age and get closer to retirement, your portfolio should be getting a little bit more conservative—because you don't want to have a lot of risk at retirement, but you do want to have a lot of risk when you're young and have a huge time horizon in front of you. This takes care of all that for you, so it's a great option for anyone who doesn't want to spend a lot of time managing their investments. Q: Vanguard was in the headlines lately after making some sizable distributions from some of its target-date funds. Although Vanguard's distributions may have been big, target-date funds, in general, aren't great investments for taxable accounts. Talk about why. A: They'repredominantly designed for 401(k) plans, which is mostly where the assets are. And tax-advantaged accounts, like an IRA, aren'treally thinking about taxes. Sothe bond portfolio, which tends to be taxable bonds, that income is taxed at an ordinary rate. Also, we talked about rebalancing, which is when you sell your winners and buy your losers. Anytime you're selling your winners, that's going to trigger a taxable event. In a 401(k) or an IRA, you don't have to worry about those. In a taxable account, it could be kind of a headache. Q: A lot of investors already have a relationship with a brokerage or an asset manager. Can they feel comfortable going with whomever they already have that relationship with? Or does it pay to shop around? A: It always pays to look at your options, but I would caution that a lot of brokerages will take steps to steer you toward their own offerings. And that may mean additional fees may be charged if you pick a different target-date fund, which couldkind of kill the value proposition. What we've seen with target-date funds is that the return differences can be narrow, soadditionalfees could make a significant difference. Q: What are some key questions that investors should be asking before they invest in a target-date fund? A: You want to know what the glide path looks like and whether it fits your risk tolerance at different stages in life, which could be difficult to know early on. A 25-year-old probably isn't going to have a good sense of what their risk tolerance is going to look like at 60, but the shape of the glide path really does matter. You also want to understand the underlying funds. Are they index funds, actively managed funds, or a combo of both? Maybe you have a preference. The other thing you want to think about is fees. Fees matter, particularly in an IRA where you may not have the benefit of getting the cheapest share class like you would through a company 401(k). ____ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to Jason Kephart is a senior principal of multi-asset strategy ratings for Morningstar. Susan Dziubinski is an investment specialist at Morningstar. Jason Kephart And Susan Dziubinski Of Morningstar, The Associated Press
The Independent
10 hours ago
- Business
- The Independent
Why target-date funds are great IRA investments
Why do target-date funds make ideal IRA investments? Here to discuss this topic is Jason Kephart, a senior principal with Morningstar's manager research team. The interview has been edited for length and clarity. Q: Target-date funds tend to be great investments for an IRA, because if investors choose the target-date fund that fits their time horizon, then that IRA effortlessly fits in with the rest of a portfolio. Delve into that. A: Target-date funds are a great set-it-and-forget-it for investors who don't want to spend a lot of time thinking about: How much of my portfolio should be in stocks versus bonds? What funds should I pick to fill those buckets?The target date takes all that off the hands of investors. The other beauty is regular rebalancing, so your portfolio doesn't get out of whack. As you age and get closer to retirement, your portfolio should be getting a little bit more conservative—because you don't want to have a lot of risk at retirement, but you do want to have a lot of risk when you're young and have a huge time horizon in front of you. This takes care of all that for you, so it's a great option for anyone who doesn't want to spend a lot of time managing their investments. Q: Vanguard was in the headlines lately after making some sizable distributions from some of its target-date funds. Although Vanguard's distributions may have been big, target-date funds, in general, aren't great investments for taxable accounts. Talk about why. A: They'repredominantly designed for 401(k) plans, which is mostly where the assets are. And tax-advantaged accounts, like an IRA, aren'treally thinking about taxes. Sothe bond portfolio, which tends to be taxable bonds, that income is taxed at an ordinary rate. Also, we talked about rebalancing, which is when you sell your winners and buy your losers. Anytime you're selling your winners, that's going to trigger a taxable event. In a 401(k) or an IRA, you don't have to worry about those. In a taxable account, it could be kind of a headache. Q: A lot of investors already have a relationship with a brokerage or an asset manager. Can they feel comfortable going with whomever they already have that relationship with? Or does it pay to shop around? A: It always pays to look at your options, but I would caution that a lot of brokerages will take steps to steer you toward their own offerings. And that may mean additional fees may be charged if you pick a different target-date fund, which couldkind of kill the value proposition. What we've seen with target-date funds is that the return differences can be narrow, soadditionalfees could make a significant difference. Q: What are some key questions that investors should be asking before they invest in a target-date fund? A: You want to know what the glide path looks like and whether it fits your risk tolerance at different stages in life, which could be difficult to know early on. A 25-year-old probably isn't going to have a good sense of what their risk tolerance is going to look like at 60, but the shape of the glide path really does matter. You also want to understand the underlying funds. Are they index funds, actively managed funds, or a combo of both? Maybe you have a preference. The other thing you want to think about is fees. Fees matter, particularly in an IRA where you may not have the benefit of getting the cheapest share class like you would through a company 401(k). ____ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to Jason Kephart is a senior principal of multi-asset strategy ratings for Morningstar. Susan Dziubinski is an investment specialist at Morningstar.
Associated Press
10 hours ago
- Business
- Associated Press
Why target-date funds are great IRA investments
Why do target-date funds make ideal IRA investments? Here to discuss this topic is Jason Kephart, a senior principal with Morningstar's manager research team. The interview has been edited for length and clarity. Q: Target-date funds tend to be great investments for an IRA, because if investors choose the target-date fund that fits their time horizon, then that IRA effortlessly fits in with the rest of a portfolio. Delve into that. A: Target-date funds are a great set-it-and-forget-it for investors who don't want to spend a lot of time thinking about: How much of my portfolio should be in stocks versus bonds? What funds should I pick to fill those buckets?The target date takes all that off the hands of investors. The other beauty is regular rebalancing, so your portfolio doesn't get out of whack. As you age and get closer to retirement, your portfolio should be getting a little bit more conservative—because you don't want to have a lot of risk at retirement, but you do want to have a lot of risk when you're young and have a huge time horizon in front of you. This takes care of all that for you, so it's a great option for anyone who doesn't want to spend a lot of time managing their investments. Q: Vanguard was in the headlines lately after making some sizable distributions from some of its target-date funds. Although Vanguard's distributions may have been big, target-date funds, in general, aren't great investments for taxable accounts. Talk about why. A: They'repredominantly designed for 401(k) plans, which is mostly where the assets are. And tax-advantaged accounts, like an IRA, aren'treally thinking about taxes. Sothe bond portfolio, which tends to be taxable bonds, that income is taxed at an ordinary rate. Also, we talked about rebalancing, which is when you sell your winners and buy your losers. Anytime you're selling your winners, that's going to trigger a taxable event. In a 401(k) or an IRA, you don't have to worry about those. In a taxable account, it could be kind of a headache. Q: A lot of investors already have a relationship with a brokerage or an asset manager. Can they feel comfortable going with whomever they already have that relationship with? Or does it pay to shop around? A: It always pays to look at your options, but I would caution that a lot of brokerages will take steps to steer you toward their own offerings. And that may mean additional fees may be charged if you pick a different target-date fund, which couldkind of kill the value proposition. What we've seen with target-date funds is that the return differences can be narrow, soadditionalfees could make a significant difference. Q: What are some key questions that investors should be asking before they invest in a target-date fund? A: You want to know what the glide path looks like and whether it fits your risk tolerance at different stages in life, which could be difficult to know early on. A 25-year-old probably isn't going to have a good sense of what their risk tolerance is going to look like at 60, but the shape of the glide path really does matter. You also want to understand the underlying funds. Are they index funds, actively managed funds, or a combo of both? Maybe you have a preference. The other thing you want to think about is fees. Fees matter, particularly in an IRA where you may not have the benefit of getting the cheapest share class like you would through a company 401(k). ____ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to Jason Kephart is a senior principal of multi-asset strategy ratings for Morningstar. Susan Dziubinski is an investment specialist at Morningstar.
Yahoo
28-05-2025
- Business
- Yahoo
State Street, Apollo to Launch 2nd Public-Private ETF
Ladies and gentlemen, State Street may have just done it again. The leading asset manager filed to launch a second exchange-traded fund that would give investors exposure to both private and public investments in a single vehicle — something that had never been done until just a few months ago. The SPDR SSGA Short Duration IG Public & Private Credit ETF is expected to allocate at least 80% of the fund's net assets in a portfolio of investment-grade debt securities, and typically anywhere from 10% to 35% in private credit, according to a filing on Friday. It will mark the second such fund from the powerhouse partnership between State Street and Apollo Global as a laundry list of firms try to open up private credit to Main Street investors. 'An ETF with a short-duration profile makes sense,' said Jason Kephart, a senior principal at Morningstar. 'It's easy to slice-and-dice based on maturities.' This story was originally published on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter. States Street's Short Duration IG Public & Private Credit ETF will invest in a 'wide range' of private credit, like instruments that are directly originated, issued in private offerings or to private companies, and even by non-bank lenders, according to the release. What stands out about the filing — and differentiates it from the company's first public-private ETF launch PRIV in February — is the duration. Bond products, and credit, generally have short, intermediate and long-term varieties that give investors time-period options to lock up their money. Short-duration products, in particular, are attractive to investors dealing with less stable businesses, Kephart said. 'Investors that want to lend to riskier companies can get their money back faster — and that probably does have some appeal to people,' he said. While details are still emerging, the filing revealed: The product may invest up to 20% of its net assets in high-yield securities, known as 'junk' bonds, according to the filing. The ETF may also use derivative instruments, like futures contracts, swaps, and options, to hedge currency exposure and manage yield. Fees and a ticker for the fund were not disclosed. 'For regulatory reasons, we cannot discuss funds that are pending SEC review,' said a State Street spokesperson. 'We are in a quiet period.' What Gives? State Street's PRIV, the OG of public-private ETFs, launched in late February, but has pulled in just $55 million in assets since, leaving some experts to worry about investor demand for the new products. Just $5 million in assets flowed into the fund in the first two weeks, and new investments have now almost completely dried up. 'Are financial advisors as excited about getting private assets into client portfolios as asset managers are about selling them?' Kephart said. 'We don't really know as of yet.' Some advisors have voiced concern that private asset managers may be looking to offload junk assets. They're also worried about liquidity, and if the interests of asset managers selling the products are actually aligned with those of their clients. 'It's a way to stand out,' Kephart said. 'If it's in the best interest of investors, it's fair to say … maybe.' The post State Street, Apollo to Launch 2nd Public-Private ETF appeared first on The Daily Upside. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
