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Rating:Morningstar Downgrades Schwab's and DWS' Target-Date Ratings Not Rated 1.0 Email Routing List Email & Route  Print Print
Tuesday, August 9, 2011

Morningstar Downgrades Schwab's and DWS' Target-Date Ratings

Reported by Armie Margaret Lee

Morningstar on Tuesday released its latest quarterly review of target-date fund family ratings. Two target-date families -- DWS and Schwab -- saw a downgrade, while the other 20 tracked by Morningstar saw no change in their ratings. (see the chart below)

Morningstar lowered its rating for DWS from below average to bottom.

"The DWS LifeCompass target-date series probably won't turn around until the firm behind it does," wrote fund analyst Greg Carlson. He added that the quant team "doesn't have a good menu of in-house funds to choose from" and the LifeCompass funds are "hampered by above-average expense ratios."

The Chicago-based firm cut its rating for Schwab from average to below average, citing the uncertainty created by the sudden departure of the funds' manager, Daniel Kern, in July.

"Schwab had no clear successor in line behind Kern," wrote mutual fund analyst David Falkof in the report. "For now, Schwab's collective trust group is overseeing the series. The team of fund analysts and portfolio managers runs a series of trusts with similar asset-allocation characteristics as the Schwab target-date series. There is, however, little overlap in the portfolio holdings."

A spokesperson for DWS was not immediately able to comment on the Morningstar report. MFWire.com could not immediately reach a Schwab spokesperson for comment.

Morningstar's Target-Date Family Ratings
Fund Family 6/30/2011
Overall Rating
Vanguard Target Retirement Series Top
T. Rowe Price Retirement Series Top
American Funds Target Date Retirement Series Top
JPMorgan SmartRetirement Series Top
TIAA-CREF Lifecycle Series Above Average
Wells Fargo Advantage DJ Target Date Series Above Average
American Century Livestrong Series Above Average
Vantagepoint Milestone Series Above Average
MFS Lifetime Series Average
Fidelity Freedom Series Average
ING Solution Series Average
Fidelity Advisor Freedom Series Average
John Hancock Lifecycle Series Average
MassMutual RetireSMART Series Average
BlackRock LifePath Series Average
Principal LifeTime Series Average
Schwab Target Series Below Average
Putnam RetirementReady Series Below Average
State Farm LifePath Series Below Average
DWS LifeCompass Series Bottom
AllianceBernstein Retirement Str Series Bottom
Oppenheimer LifeCycle Series Bottom

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