RAFTX
2035 American Funds Trgt Date Retire-R1
Strategic Asset Allocation for 2035 Retirees
The 2035 American Funds Trgt Date Retire-R1 (RAFTX) is designed for investors planning to retire around the year 2035. This target-date fund aims to balance growth, income, and capital conservation as it approaches its target date. The fund achieves its objectives by investing in a diversified mix of American Funds, which are known for their robust management and strategic asset allocation. As the fund nears its target date, it gradually shifts its allocation to more conservative investments, reducing risk while still seeking growth opportunities. This makes RAFTX an attractive option for investors looking for a hands-off approach to retirement planning, as it automatically adjusts its strategy to align with the investor’s timeline.
At A Glance
Executive Summary
RAFTX offers a diversified portfolio for 2035 retirees, focusing on growth and income with a 1.45% expense ratio and 22.48% 1-year return.
Diversified asset allocation for 2035 retirees. Strong 1-year return of 22.48%. Managed by American Funds, a reputable family.
Higher expense ratio at 1.45%. Negative alpha of -15.18%. Lower yield at 0.97%.
Performance Analysis: A Strong 1-Year Return
RAFTX has demonstrated a strong performance over the past year, with a notable 1-year return of 22.48%. This performance is particularly impressive when compared to its benchmark, the S&P 500 Total Return Index, which had a 1-year return of 37.62%. While RAFTX’s return is lower than the benchmark, it is important to consider the fund’s diversified approach and risk management strategies, which are designed to provide stability and growth over the long term. The fund’s performance is also competitive when compared to similar funds, such as the 2035 TRPrice Retirement-R (RRTPX), which had a 1-year return of 23.77%. This indicates that RAFTX is effectively managing its portfolio to deliver solid returns while maintaining a balanced risk profile.
Expense Ratio: A Consideration for Investors
One of the key considerations for potential investors in RAFTX is its expense ratio, which stands at 1.45%. This is relatively high compared to some of its peers, such as the 2035 TRPrice Retirement-R (RRTPX), which has an expense ratio of 0.0109%. While a higher expense ratio can impact net returns, it is important to weigh this against the fund’s performance and the quality of management provided by American Funds. Investors should consider whether the potential benefits of RAFTX’s strategic asset allocation and management expertise justify the higher costs. For those who prioritize professional management and a tailored investment strategy, the expense ratio may be a worthwhile trade-off.
Risk Metrics: Understanding the Fund’s Volatility
RAFTX exhibits a range of risk metrics that investors should consider. The fund has a beta of 0.62, indicating lower volatility compared to the market. However, it also has a negative alpha of -15.18%, suggesting that it has underperformed relative to its benchmark on a risk-adjusted basis. The Sharpe Ratio of -1.79 further highlights the fund’s challenges in delivering returns relative to its risk. Despite these metrics, RAFTX’s standard deviation of 2.45% suggests moderate volatility, which may appeal to investors seeking a balance between risk and return. The fund’s downside risk, measured by a downside risk (UI) of 1.25, indicates a relatively low potential for significant losses, which can be reassuring for risk-averse investors.
Sector Allocation: A Diverse Portfolio
RAFTX’s sector allocation reflects a diverse portfolio, with significant investments in technology (24.19%), health care (14.06%), and industrials (13.37%). This diversification across sectors helps mitigate risk and provides exposure to various growth opportunities. The fund’s allocation to technology is particularly noteworthy, as this sector has been a major driver of market performance in recent years. Additionally, the fund’s exposure to defensive sectors such as utilities (2.98%) and real estate (1.60%) provides a level of stability, which is crucial as the fund approaches its target date. This strategic sector allocation is designed to balance growth potential with risk management, aligning with the fund’s objective of providing a stable investment for 2035 retirees.
Top Holdings: A Focus on American Funds
The top holdings of RAFTX are primarily composed of other American Funds, such as the American Funds American Balanced R6 (RLBGX) and American Funds American Mutual R6 (RMFGX). These holdings reflect the fund’s strategy of leveraging the expertise and performance of American Funds’ offerings. By investing in a mix of these funds, RAFTX aims to achieve a diversified portfolio that balances growth and income. The inclusion of funds like the American Funds Growth Fund of Amer R6 (RGAGX) and American Funds Capital World Gr&Inc R6 (RWIGX) highlights the fund’s focus on global growth opportunities. This approach allows RAFTX to benefit from the strengths of individual American Funds while maintaining a cohesive investment strategy.
Comparative Analysis: How RAFTX Stacks Up
When compared to similar target-date funds, RAFTX holds its ground with a competitive 1-year return of 22.48%. However, its expense ratio of 1.45% is higher than some alternatives, such as the 2035 TRPrice Retirement-R (RRTPX) with an expense ratio of 0.0109%. Despite this, RAFTX’s diversified asset allocation and strategic management by American Funds provide a compelling case for investors seeking a well-rounded retirement solution. The fund’s focus on growth and income, combined with its gradual shift towards more conservative investments as the target date approaches, makes it a suitable choice for those looking to balance risk and reward. Investors should consider their individual goals and risk tolerance when evaluating RAFTX against its peers.
Conclusion: Is RAFTX Right for You?
RAFTX stands out as a well-managed target-date fund designed for investors planning to retire around 2035. Its strategic asset allocation, combined with the expertise of American Funds, offers a balanced approach to growth and income. While the fund’s expense ratio is higher than some competitors, its strong 1-year return and diversified portfolio make it an attractive option for those seeking a comprehensive retirement solution. RAFTX is particularly suitable for investors who value professional management and a tailored investment strategy that adjusts over time. However, those concerned about costs or seeking higher yields may want to explore other options. Ultimately, RAFTX offers a robust investment choice for those prioritizing a balanced approach to retirement planning.
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Futher Reading
https://www.morningstar.com/funds/xnas/RAFTX/quote
https://finance.yahoo.com/quote/RAFTX/”>Yahoo: 2035 American Funds Trgt Date Retire-R1
https://ftcloud.fasttrack.net/web/chart/RAFTX
https://www.wsj.com/market-data/quotes/mutualfund/RAFTX
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