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-- market lows and so on march -- clearest sign.
That traditional retirement plans aren't always risk free today's market -- has a few ideas for anyone with a 401K.
That is Robert Reynolds he -- Putnam Investments president and CEO his company has over a hundred billion dollars in assets great to see it thank you for being here.
Morning elections are you know I am great let's give people some good advice one thing -- suggested is.
If you're on the sidelines now is the time to get involved get invested.
How do we do that knowing what the right -- parameters are given all this volatility.
Why I think it is clearly that.
Good advice is a key in this type of market scenario and there's a -- that a good advice out there and I also think with the target date funds that we're really created in the early nine nieces and put people in appropriate asset allocation.
Have proved to be a very very valuable tool.
People -- pulled out -- -- market.
And -- in money market -- is paying less 1%.
They miss one of the greatest moves in the market and then both on the equity market and bond market so.
Getting the right advice have you right asset allocation is -- -- -- -- successful retirement.
When you and I last spoke we talked about the fact that there's upwards of fourteen trillion dollars in money market accounts and then deposits across this country which you rightly pointing out.
Are not getting a good return on investment.
For people who don't know about target date funds you're you're trying to do something for the retirement community explain how those would work.
Right -- a target date fund this is in invest chewed it today sugary tar in the future.
For instance if you're the days Tony forty.
It establishes a portfolio did it allows you to meet the goals for 24.
Forty retirement date because of that length of time there is much more of an aggressive portfolio.
As you get closer -- -- retirement.
These -- portfolios become much much more conservative.
Which is what you -- in -- because the risk as we which demonstrated in 2008 for someone close to retirement.
He is been a -- and that's one the reasons why in our target date funds.
We've incorporated apps will return along with relative return products.
To dampen volatility but is still allow the funds -- perform at a high level.
-- target funds had been fraught with some concerns particularly for those people whose target date funds were set to expire.
This year or next year many of them losing a tremendous amount of money when you talk about.
-- an absolute and relative performance to make sure that there isn't too much volatility.
Layman's terms what does that mean how does that make it is safer investment.
Right if you're invested it.
-- umbrella term for return which most funds are today.
You're investing against -- benchmark and again is demonstrated in 2008.
A benchmark can go up or down and as.
And as shown in the fourth quarter they went down considerably.
An absolute return phone is set up to provide a positive return.
For the target as it is to provide -- punt return every single year.
And the funds we set up a family of these funds that.
Targeted -- return over -- -- bills will there be some percent 5% 3% 1%.
To allow the advisor in the unit and the investor to choose a -- they wanna take in the type of return they need in the retirement portfolios so.
By combining relative and absolute.
You dampen volatility but still have the opportunity to perform at a level you need to have a successful retirement.
Let's talk a little bit -- -- -- systemic changes that could occur in mutual fund industry as a result of this recession.
You know I have been speaking quite aggressively about employer based retirement savings plans you've talked to me the past.
76 million baby boomers out there Social Security -- expected to rise -- 84 million people looking to.
Take from Social Security between now and 2030.
What are the real -- changes that you would recommend to congress that we look at today.
Why I think his multiple bad.
41 K defined contribution.
Has become America's retirement system.
And right now it covers half of the working Americans so we need to work on covering the other half I think that's one of the goals he system.
Then the people participating in a 41 K the key is to get them to participate.
This is why.
In a pension protection act of 2006.
They created what is so call -- negative election which means everyone's enrolled in the plan.
And you lucked out if you don't want to participate.
They also made negative elections around contribution so you contribute your contributions for the maximum amount and -- -- elect not to.
And then the third thing they do they made default funds these target date funds again.
Being in the right asset allocation.
Is to key for successful retirement and that's -- -- will return I mean these target date funds do for.
You are at the forefront of this -- year this is the conversation you've called it workplace savings three point now there was a one point know there was a 2.0.
In -- three years there you said to me just a couple of months ago Alexis the next five to ten years in the mutual fund industry will quote.
Be one of the best periods ever.
Tell me why people want to win best in mutual fund companies not just invest in your funds.
Right guy that is that mutual funds -- the best way to invest because they are.
Everything an investor wants other words you have professional money management.
You have liquidity.
The F transparency.
You have reasonable fees I think all the things it.
Became a negative last year mutual funds offer to you.
And I think the next five to ten years are going to be terrific opportunities in the marketplace we just swung to a decade.
Relative flat market.
And it all through history.
When you have ten years of flat market the next hand our.
-- have significant upside so I really think.
With the aging of the baby boomers in the onus is 62 years old so there come on.
And that you have so many people in this demographic range.
That they need someplace investor money in it cannot be -- investments earning less 1% so they have to be.
Stock bonds and of course absolute return type vehicles.
To reach your goals last question I have to ask you.
What if any yes you up at night.
Well -- guys.
I think we're in a period of time where there's a lot of uncertainty in Washington and whether be on the regulatory front.
Health care etc.
And the market does not like uncertainty.
So the sooner we can.
-- a lot of these things down and be able to move forward.
With a lot of certainty in making decisions we make.
I think they're better off the market's going to be in the better off to investors going to be I think.
The again and won back to this year.
This success it managers have had this year especially active managers verses index.
Is will restore a lot of people because you haven't.
Many many equity firms.
A large majority outperforming.
And on the bond side getting double digit equity type returns.
And -- kind of rest I think is just tremendous for the investor.
Rob Reynolds thank you very much for joining us this morning we appreciate it.
OK Alexis all of us are -- think you -- I get.
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