In an article titled “In Praise of Target-Date Funds,” one of our favorite WEALTHTRACK guests, Morningstar’s Director of Personal Finance, Christine Benz described them as “…nothing short of the biggest positive development for investors since the index fund.”
That got my attention! So this week we are interviewing one of the best target-date managers in the business. He is Wyatt Lee, who is Head and Co-Manager of T. Rowe Price’s $390 billion Target Date Strategies, the largest group of actively managed target-date products in the U.S.
The firm’s Retirement Series earned a Gold analyst rating from Morningstar, one of only two in the actively managed category, for its stellar performance and high ratings for its process, people, and the parent company.
Lee begins with the basics and defines what a target-date fund does and how the product has evolved since it was first introduced in 1994. It turns out target-date funds can be an effective retirement vehicle for investors at all stages of life and that there are many options available.

Part 2 of 2
Candid career advice from three super successful women portfolio managers. Causeway Capital’s Sarah Ketterer, Capital Group’s Karen Choi, and Canyon Partner’s Robin Potts share their victories, setbacks and strategies as they tear down the pink wall.

it is unlikely that your Board would be able to ensure that the approximately 5,000 mutual funds are all free of Chinese firms that pose a direct threat to American national security, enterprises implicated in Chinese Communist Party (CCP) human rights abuses, or companies that otherwise lack the requisite financial transparency and fiduciary responsibility to qualify as prudent investment opportunities. In fact, the FRTIB has explicitly acknowledged as much ...

In coming to this decision [to switch to ACWI ex-US], the Board noted that moving to the broader I Fund benchmark is in the best interest of participants and beneficiaries, a current best practice in the investment industry, and is widely recognized as a smart strategy in today’s market. The ten largest U.S. companies’ 401(k) plans all invest in emerging markets, as do the ten largest federal contractor plans and the six largest target date fund providers. In addition, the 20 largest defined benefit plans—all of which are for state government workers—invest in emerging markets. TSP participants can decide which TSP funds they want to invest in.

After widespread and bipartisan outrage in 2020, the FRTIB voted unanimously to abandon the ACWI ex-US IMI transition.

Board defers action on I Fund transition — Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new Federal Retirement Thrift Investment Board Members, pending further study, the Board is delaying the implementation of the I Fund benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index.

U.S. service-members and other federal employees would likely be shocked to learn that the FRTIB is unaware of which companies make up these approved funds or what risk those companies pose. ... When they invest through TSP, they rightly expect the FRTIB will protect them and their investments from these types of dangerous investments.

She also noted that the TSP’s current I Fund index includes Hong Kong, which is part of China, and that there is no widely recognized index for developed markets that excludes Hong Kong. As such, to both divest from Hong Kong equities and create a new, specially designed index without Chinese investments would increase costs to all TSP participants. It would also preclude the implementation of the TSP mutual fund window, as monitoring approximately 5,000 mutual funds for any investments in Chinese entities would prove too costly for the plan.

Toward the end of a first term dominated by international terrorism, President Bush renewed this call in his 2004 State of the Union address: “Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people.”

You can make an age-59½ withdrawal only from an account that’s associated with your active employment. So, for example, if you have a uniformed services account but have left the uniformed services and are now a federal civilian employee, you can only make an age-59½ withdrawal from your civilian TSP account.

In-service rollovers to T-IRA are allowed by TSP. Not many retirement plans allow that. 401k/403b vs T-IRA involves other issues covered elsewhere (TSP is formally not 401k, but follows similar rules).

"As of December 31, 2020, TSP has approximately 6.2 million participants (of which approximately 3.8 million are actively participating through payroll deductions), and more than $735.2 billion in assets under management; it is the largest defined contribution plan in the world."

That an investment in any fund other than the G Fund is made at the employee's risk, that the employee is not protected by the United States Government or the Board against any loss on the investment, and that neither the United States Government nor the Board guarantees any return on the investment.

For the TSP’s brokerage window, Congress has excluded all categories of investments except for mutual funds.¹
¹ See Thrift Savings Plan Enhancement Act of 2009, Public Law 111–31, Division B, Title I, sec. 104 (codified at 5 U.S.C. 8438(b)(5)(A)).

The comments [to this government rule] indicate that many TSP participants are under the impression that other retirement plans negotiate free brokerage services. We looked into what have been described as ‘‘free’’, ‘‘no-transaction-fee’’, and ‘‘zero cost’’ mutual fund trades offered to participants in other retirement plans. We found that those prices are often caveated with fine print disclaimers, such as this:
No-Transaction-Fee (NTF) mutual funds are no-load mutual funds for which [brokerage firm] does not charge a transaction fee. NTFs, as well as other funds, have other continuing fees and expenses described in the fund’s prospectus. [Brokerage firm] receives remuneration from fund companies for record keeping, shareholder and other administrative services. The amount of remuneration is based in part on the amount of investments in such funds by [brokerage firm] clients.
The remuneration (i.e., fees) that brokerage firms receive from fund companies are treated by the fund companies as fund expenses, which are ultimately passed on to the people who have already invested in the fund. This type of arrangement between a brokerage firm and a fund company is called revenue sharing. Revenue sharing is not inherently pernicious. In many industries, revenue sharing is like a referral fee that a business owner might pay to compensate a person for bringing a new customer to their business. For most businesses, revenue sharing is a marketing cost borne by the business.
Fund companies are, of course, businesses also. But fund companies are structurally different from other corporations. They typically have no employees, no physical assets, and no tangible products. They are just a collection of contracts relating to pools of money (i.e., funds), and they charge their costs of doing business to the people who have invested in the funds, regardless of how well the funds perform. Their unique corporate structure has led both Congress and the U.S. Supreme Court to conclude that ‘‘the forces of arm’s-length bargaining do not work in the mutual fund industry in the same manner as they do in other sectors of the American economy.’’ Jones v. Harris Assocs. L.P., 559 U.S. 335, 338 (2010), quoting S. Rep. No. 91–184, at 5 (1969). This does not mean that there is something sinister about the mutual fund industry. It means only that the nature of the product makes the usual distinctions between price, cost, revenue, profit, and quality less clear than they are in other industries.
Fund companies are not required to provide individualized statements to investors, detailing the exact dollar amount of the fund’s fees that each investor has indirectly paid. Consequently, revenue sharing between retirement plans, record keepers, brokerage firms, and fund companies can lead to confusing, opaque fee disclosures. Revenue sharing converts explicit fees (e.g., account maintenance fees and transaction fees) into less transparent fees (e.g., fees embedded in the fund’s expense ratio). By including the fees in the fund’s expense ratio, the return on an investment in that fund is reduced. Most participants in private sector plans have no idea that revenue sharing exists, much less how much it decreases the return of their investments. [footnote omitted]
The FRTIB values transparency. We believe TSP participants need, and deserve, to see the dollar amount of the fees they pay for their mutual funds. Toward that end, TSP participants will pay account maintenance fees and certain transaction fees directly rather than paying them indirectly through revenue sharing. Furthermore, FRTIB has contractually required the TSP record keeper, their trading platform provider, their broker-dealer(s), and any of their other affiliates or subcontractors to rebate all revenue sharing payments, or any other type of indirect compensation, they receive in connection with participants’ mutual fund window investments. The rebates will be credited to participants’ mutual fund window accounts. This ensures that the dollar amounts of all fees and expenses borne by TSP participants for services provided in connection with their mutual fund window investments are explicitly disclosed.

One commenter suggested that a $25-$30 fee would be more reasonable [than $55 for the administrative fee]. This commenter did not offer a rationale for why $25-$30 would be more reasonable or suggest an alternative means of deriving an appropriate fee amount. Another commenter suggested that all TSP participants should share in the cost of the mutual fund window. We believe this suggestion would conflict with an explicit Congressional directive to ‘‘ensure that any expenses charged for use of the mutual fund window are borne solely by participants that use such window.’’ 5 U.S.C. 8438 (b)(5)(B). We are, therefore, adopting the proposed rule as final without substantive change.

The Vanguard fund search is poor, I believe, because Vanguard wants you to buy only their funds , move to Mongolia, never use customer service, and never exchange or sell your Vanguard funds until retirement or later! (only being slightly sarcastic)