Asset Allocation Portfolios from Principal Funds Hit Significant Milestones
Principal LifeTime portfolios reach 10-year anniversary, Principal SAM portfolios turn 15
May 26, 2011 (Des Moines, IA) - Two flagship asset allocation products from Principal Funds – Principal LifeTime portfolios and Principal Strategic Asset Management (SAM) portfolios – hit significant anniversaries in 2011. The actively managed portfolios have continued to deliver solid, long-term performance through multiple market cycles.
Principal LifeTime Portfolios
Principal LifeTime portfolios hit the 10-year mark this year, displaying strong performance (PDF: 97 KB) since their inception in 2001. With assets totaling more than $18 billion, Principal LifeTime is one of the first target-date fund series in the industry and the fourth largest target-date fund offering. Currently, more than one million participants use Principal LifeTime portfolios in their investment selections.
“We’ve certainly witnessed a variety of markets over the last decade, and the Principal LifeTime series has continually evolved,” said Jeff Tyler, Principal LifeTime portfolio manager. “But we have remained true to our investment philosophy that is designed to focus on the long term and carry investors through retirement.”
To mark the anniversary, Principal Funds launched a new Principal LifeTime microsite that includes information for financial professionals and investors on:
- Asset class selection and the role of each selection in the portfolio
- Glide path structure that extends 10-15 years beyond the target date
- Portfolio construction that details the selection of established asset managers
- Disciplined rebalancing which seeks to control and manage systematic risk
- Historical timeline that illustrates how the portfolios have evolved since 2001
Principal Strategic Asset Management (SAM) Portfolios
Principal Strategic Asset Management (SAM) portfolios, the target-risk fund series, turns 15 this year. The SAM portfolios are subadvised by Edge Asset Management, a wholly owned subsidiary of the Principal Financial Group®. A pioneer in asset allocation strategies, Edge developed one of the first target-risk series in the industry, which has delivered solid performance over the history of the product.
The five diversified, actively managed portfolios became registered mutual funds in 1996. SAM assets total more than $11.2 billion, making it the sixth largest target-risk fund offering in the industry, with nearly 335,000 shareholder accounts.
“Our disciplined investment process has served us well over the years as we continually seek to provide investment solutions and manage risk,” said Todd Jablonski, SAM portfolio manager. “At our 15-year milestone, we continue our legacy of evolution within the framework of our time-tested, three-step investment process.”
During the fourth quarter of 2010, the SAM portfolios were adjusted to include investments in a wider range of asset classes and underlying funds. These enhancements included a reclassification of the portfolios’ overall composition in as many as 27 distinct asset classes and of up to 14 new sub-advisors.
A new microsite for financial professionals includes an updated “SAM Yearbook,” which provides an in-depth look at the portfolios and the effects of economic and market events over the years.
In addition, a publicly available site devoted to the SAM portfolios contains:
- The portfolio management team’s outlook for the economy and financial markets
- Recent strategies implemented within the portfolios
- Allocation breakdown and performance for each of the SAM portfolios
Both Principal LifeTime and SAM are available as standalone investments or as core portfolio holdings with satellite offerings based on individual client needs.
In Barron’s latest annual ranking of top mutual fund families, Principal Funds earned No. 3 out of 57 fund families based on one-year performance and No. 7 out of 46 fund families based on 10-year performance. Principal Funds ranked third out of 57 fund families in the mixed equity (asset allocation) category, also based on one-year performance.
About the Barron’s Fund Family Ranking
Past performance is no guarantee of future results. Of fund companies that met the criteria, Principal Funds was ranked #3 out of 57 companies for one year, #33 out of 53 for five years, and #7 out of 46 for 10 years, all periods ended 12/31/2010. In Barron's one-year sub-category rankings, Principal Funds ranked #3 in Mixed Equity, #7 in World Equity, #16 in U.S. Equity, #20 in Taxable Bond, and #29 in Tax-Exempt Bond (out of 57 fund families). Performance data used for the rankings does not account for any up-front sales charges, contingent deferred sales charges or 12b-1 fees.
To qualify for the rankings, a fund family must have at least three funds in Lipper's general U.S. stock category, one in world equity (combining global and international funds), one mixed-equity fund (stocks and bonds), at least two taxable bond funds and one tax-exempt offering. Each fund's return is measured against those of all funds in its Lipper category and assigned a percentile ranking, with 100 as the highest and 1 the lowest, which is then weighted by asset size, relative to the fund family's other assets in its general classification. The score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The category weightings for the one-year results: general equity, 40.52%; world equity, 14.32%; mixed equity, 16.46%; taxable bond, 24.52%; tax-exempt bond, 4.18%. The same process is repeated for the five- and 10-year rankings.
About Principal LifeTime Funds
Principal LifeTime 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. Investors choose the portfolio most closely matching their approximate retirement date. As each Principal LifeTime portfolio 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 portfolio continues to be managed for approximately 15 years beyond the original target date. It is expected that within 10 to 15 years after its target year, the allocation will match that of the Principal LifeTime Strategic Income Fund. Principal LifeTime portfolios assume the value of the investor’s account will be withdrawn gradually during retirement. Neither the principal nor the underlying assets of the Principal LifeTime investment options are guaranteed at any time, including the target date. Investment risk remains at all times.
About Principal Funds
Principal Funds is a leading provider of mutual funds, with $70.1 billion in assets under management. Principal Funds brings expertise in global investment management, asset allocation and retirement leadership to financial professionals and investors. Including its target-risk and target-date offerings, Principal Funds is the fifth largest manager of lifecycle funds in the industry. The companies that make up Principal Funds are members of the Principal Financial Group®. For more information, visit www.principalfunds.com.
About Edge Asset Management
Edge Asset Management (Edge) offers specialized expertise in managing equities, fixed income and asset allocation portfolios. Edge has been a pioneer in the field of actively managed asset allocation funds and is a leading manager of value equities and taxable fixed income securities, with $20.2 billion in assets under management. The firm manages the Strategic Asset Management (SAM) Portfolios, a target-risk investment option for lifecycle funds. Edge is an affiliate of Principal Global Investors, and a member of the Principal Financial Group®.
About the Principal Financial Group
The Principal Financial Group® (The Principal®) is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500®, the Principal Financial Group has $327.4 billion in assets under management and serves some 16.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.
Investors should carefully consider a fund’s investment objectives, risks, charges, and expenses prior to investing. A prospectus, or summary prospectus if available, containing this and other information can be obtained by contacting a financial professional, visiting principalfunds.com, or calling 800.222.5852. Read the prospectus carefully before investing.
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.
Asset allocation/diversification does not guarantee a profit or protect against a loss.
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.
- As of March 31, 2011.
- FRC Mutual Fund Lifecycle Report 1Q11.
- As of March 31, 2011. Includes all share classes of the Principal Funds, Inc. and Principal Variable Contracts Funds, Inc.
- “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.