Charles Schwab is the most recent mutual fund company to introduce a lineup of funds designed to generate a targeted annual payout for retirees.
Charles Schwab is the most recent mutual fund company to introduce a lineup of funds designed to generate a targeted annual payout for retirees.
The San Francisco-based firm announced today that its Schwab Monthly Income Funds are comprised of three funds, each with a different annual payout target to help investors plan for their income needs.
These funds join an existing lineup of retirement-focused funds including target- date funds and income funds that Schwab already has on the market.
“The Schwab Monthly Income Funds are a simplified solution for people who want help replacing the income they left behind at work but have no desire to manage a portfolio of this complexity,” said Patrick Waters, director of Retirement Income Products at Schwab, in a statement.
Most recently, Boston-based Fidelity Investments had launched the Fidelity Advisor Income Replacement Funds, which is a similar set of funds and officials with the Malvern, Pa.-based The Vanguard Group say they intend to launch similar funds later this year as well.
The income is not guaranteed in these funds and fluctuates depending on market conditions.
Schwab’s new funds will include the Moderate Payout Funds which offers an annual target income payout of 3 to 4% and has the greatest exposure to equities; the Enhanced Payout Fund, which has a target annual income payout of 4 to 5%; and the Maximum Payout Fund, which offers the highest level of income potential with a payout of 5 to 6% and the most conservative exposure to equities of the three funds.
