Invesco Aim Changes Name, Structure of Target-Date Funds

Shareholders of the AIM Independence Funds have approved changing the funds’ sub-classification from diversified to non-diversified and approved the elimination of what was described as “a related fundamental investment restriction”.  

According to the announcement, effective November 4, 2009, the AIM Independence Funds, Invesco Aim’s target-date funds, will be renamed AIM Balanced-Risk Retirement Funds. The underlying investments will change from a mix of AIM mutual funds and Invesco PowerShares exchange-traded funds to a combination of the AIM Balanced-Risk Allocation Fund and cash or 100% AIM Balanced-Risk Allocation Fund. In addition, the portfolio management team, glide path and investment objectives and strategies will change, according to the firm, while the rebalance strategy will change from annually to monthly.  

“By leveraging the asset allocation capabilities of the AIM Balanced-Risk Allocation Fund, we believe the AIM Balanced-Risk Retirement Funds now offer investors in target-date funds a unique combination of potential benefits,” said Philip Taylor, Senior Managing Director of Invesco and Head of Invesco’s North American Retail business, including Invesco Aim.  

Invesco’s Global Asset Allocation Group will manage the AIM Balanced-Risk Retirement Funds. The funds’ management team will be led by Scott Wolle, Chief Investment Officer of Invesco’s Global Asset Allocation Group. Wolle, who has been with Invesco since 1999 and has 18 years of investment experience, will be assisted on the funds by portfolio managers Mark Ahnrud, Chris Devine, Scott Hixon and Christian Ulrich, each of whom has more than 13 years of investment experience, according to a press release. 

Relative to traditional balanced funds, Invesco Aim says its new target-date fund structure “seeks to provide more consistent returns over time and greater downside protection during challenging markets.”  The firm says that the new glide path (the rate at which the asset mix changes as the fund nears the defined target date) is “designed to meet the retirement savings needs of investors and protect their assets from significant losses which can negatively impact investors’ ability to achieve their retirement goals. “ 

During an investor’s asset accumulation phase, the AIM Balanced-Risk Retirement Funds will invest 100% of their assets in the AIM Balanced-Risk Allocation Fund, while ten years prior to each fund’s target retirement date, each fund will begin transitioning from an accumulation strategy to a capital preservation and real return strategy by reducing the allocation to AIM Balanced-Risk Allocation Fund and adding cash, according to the announcement. Once the fund reaches its target retirement date, the fund’s asset allocation is anticipated to become a static allocation of 60% AIM Balanced-Risk Allocation Fund and 40% in two affiliated money market funds. At the target retirement date, the fund will follow a real return strategy “designed to protect against loss of capital, inflation and longevity risk,” according to the announcement. 

Invesco Aim says that the AIM Balanced-Risk Retirement 2010, 2020, 2030, 2040 and 2050 funds are designed for investors whose target retirement date is in or about the year stated in the fund name and the point in which they would stop making new investments in the fund. “Consistent with each fund’s final target allocation and its resulting real return and capital preservation objectives, each fund is designed for investors who expect to need all or most of their money in the fund at its target date and for investors who plan to withdraw the value of their account in the fund gradually after retirement, in or about the year stated in the fund name,” according to the announcement.  Furthermore, consistent with the AIM Balanced-Risk Retirement Now Fund’s real return and capital preservation objectives, the fund is designed for investors who expect to need all or most of their money in the fund at retirement and for investors who plan to withdraw the value of their account in the fund gradually after retirement.  

Finally, Invesco Aim says that it’s important to note that investing in any of the AIM Balanced-Risk Retirement Funds does not offer a guarantee of the principal amount invested at any point during the life of the investment.