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Thursday, May 04, 2006

The Principal Pushes Asset Allocation in Retail

Reported by Marie Glancy

In an effort to increase the distribution of its fund family and catch rollover business, The Principal Financial Group has packaged and relaunched as a suite of three asset allocation initiatives targeted at financial professionals. The suite's distinct components, taken together, represent a drive to push retail sales of the Principal Investors Funds, a family encompassing 55 funds.

The newly compiled asset allocation package includes the target date Principal LifeTime Funds, which have been available for five years to the institutional market and several months to retail customers; Principal's Path for Growth and Path for Income risk-based portfolios, which are made up of Principal Investors Funds and have been in place for several years; and the Principal Managed Portfolio, a mutual fund wrap program with which Ibbotson Associates assists, helping select underlying funds.

Kyle Selberg, marketing director for retirement and investor services at The Principal, told the MFWire that the time is right to introduce an asset allocation campaign. "Asset allocation programs ... are growing incredibly in terms of popularity and gaining market share," he said. The suite will help "to streamline and make it easy for our retail customers and intermediaries" to review and utilize available services, he explained.

Selberg confirmed that The Principal's development of a structured retail asset allocation program is in large part a bid to bring satisfied 401(k) customers on board as rollover clients. "We wanted to, again, make things easy for both the broker and the retail customer by helping them essentially map over ... to a retail rollover solution," he said. Ibbotson is now performing on the retail side the same function it fulfilled for 401(k) accounts, he added.

In launching the suite, the Des Moines, Iowa-based firm emphasized the value of asset allocation in helping investors survive market dips and ultimately profit from their investment decisions. A press release cited a 2003 study, Dalbar Quantitative Analysis of Investor Behavior, which showed that investors hold asset allocation funds 32 percent longer than other funds over a ten-year period.

Selberg's statement described the suite as a way of "inviting financial professionals to let us manage the money so they can spend their time managing their existing client relationships and more time cultivating new ones."  

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