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Mutual Funds by American Association of Retired Persons (AARP)

If you are reaching your retirement years or you have already experiencing them, the American Association of Retired Persons (AARP) is the institution which will be glad to offer you advice on whatever financial concerns you have. In 2006, AARP established its first mutual fund in response to the needs of these specific groups of investors.

AARP Fund Retrospection

AARP are not novices in the mutual fund field. For more than 20 years they have collaborated with Scudder Investments and have established more than 30 mutual funds. In 2006, AARP launches its first three mutual funds independently. Later, one of the subsidiaries of AARP (AARP Financial) enriches the portfolio of mutual funds offered by AARP by three index funds.

The initial AARP funds are presented in the following table:

Fund Name US Stocks US Bonds International Stocks
AARP Conservative 20% 75% 5%
AARP Aggressive 60% 25% 15%
AARP Moderate 40% 50% 10%

Each of the portions imitates the behavior of a certain index:

  • International Stocks - MSCI EAFE Index
  • US Bonds - Lehman Brothers Aggregate Bond Index
  • US Stocks - MCSI U.S. Investable Market 2500 Index

Therefore, it can be concluded that surprisingly AARP offers mutual funds of the index type. This is quite an unusual tactic having in mind the target group of the funds (future and current retirees). Target date funds and lifecycle funds represent more logical choices, but these types have been ignored by the company.

AARP Fund Governance

The management functions of the AARP funds have been allocated to SSgA Funds Management. In the beginning, Alistare Lowe, Leilani Sanders Hall and Michael O. Martel constituted the team responsible for the management. The funds are being distributed through the networks of ALPS Distributors.

Required Minimums and Fees

The investors in an AARP mutual fund will not be hampered by any insurmountable hindrances to entry, but on the contrary. As little as $100 initial investment amount is enough to get you started in the AARP mutual fund. In addition to the $100, your subsequent investment can be the ridiculously low $25.

Furthermore, AARP keeps a low expense ratio compared to the common mutual fund. The 0.50% expense ratio is more like that of the index funds.

Unfortunately, AARP mutual funds are liable to 12b-1 fees, which amount to 0.20%.

Conclusion

Unfortunately, there is scarcity of information regarding AARP funds, such as exact ticker symbols. The introduction of this type of mutual funds is certainly a move on the part of AARP aiming at leveraging their brand name. Nevertheless, at this point it cannot be determined how well the offered mutual funds function.

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