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Wells Fargo Target Date Funds

Equity factors in focus for target date portfolios

Equity factors in focus for target date portfolios

Wells Fargo target date portfolios, with multi-factor strategies researched and implemented by Analytic Investors, may provide stronger downside protection than conventional target date portfolios while participating meaningfully in market rallies. They are designed to improve risk-adjusted returns and increase the probability of meeting the investor’s retirement needs.

Investment philosophy

The Wells Fargo Target Date Funds seek to balance longevity and market risks by focusing on asset growth in the early years and capital preservation in the later years. The funds use a broad investment universe with 11 distinct asset classes seeking to provide diversification. Each fund’s asset allocation is tailored to meet the investor’s needs at that stage of the investment cycle.

Investment process

Strategic asset allocation
Asset allocation weights change over time from focusing on return potential earlier in the glide path to focusing on capital preservation later in the glide path.

Equity allocation
Factor-based equity indexes seek better risk-adjusted returns compared with broad market benchmarks.

Fixed-income allocation
Factor-based fixed-income indexes for U.S. investment-grade and high-yield corporate debt seek better diversification and liquidity compared with broad market benchmarks.

Glide path

The glide path is designed to better balance longevity and market risks. It is built with the goal of 60-80% income replacement at retirement, encompassing both Social Security and 401(k) retirement savings.

Glide Path for Wells Fargo Target Date Funds

*The top three suites are those target date suites ranked one to three in total industry target date assets under management as of May 2017: Vanguard Target Retirement, Fidelity Freedom, and T. Rowe Price Retirement.

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For target date funds, the target date represents the year in which investors likely may begin withdrawing assets. The funds gradually seek to reduce market risk as the target date approaches and after it arrives by decreasing equity exposure and increasing fixed-income exposure. The principal value is not guaranteed at any time, including at the target date.