John Hancock Investments announced Friday it was cutting its fees by up to 31 percent in some of its target-date funds.
The John Hancock Retirement Living Suite is made up of 10 portfolios with target retirement dates that run from 2010 to 2055.The portfolios combine up to 50 different investment strategies from 20 managers across the globe, and asset allocation decisions are actively managed by the global asset allocation team at John Hancock Asset Management.
John Hancock Investments said that it would lower expenses by 20 to 26 basis points across the entire suite.
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Target-date funds have become broadly popular, and are often used as default investment options in retirement plans with automatic enrollment. Cerulli Associates has projected that target-date funds are on track to receive 63 percent of all 401(k) contributions and could make up 35 percent of all 401(k) assets by 2018.
"Plan sponsors and participants have enthusiastically embraced these portfolios as a way to automatically manage risk along the road to retirement. The expense reductions we announced today will lower fees while enabling our unique manager-of-managers approach to reach an even wider number of plan sponsors and participants in the future," Andrew G. Arnott, president and CEO of John Hancock Investments, said in a statement.
The news comes on the heels of a decision by the U.S. Supreme Court Thursday that it will hear an appeal filed by Edison International workers in a case brought by 401(k) participants suing their retirement plan for failing to make investments that carried lower fees. Numerous lawsuits have been filed by workers over excess fees in retirement accounts. If successful, the appeal in the Edison case could give plan participants more power to bring such suits.
In a 2012 newsletter focused on TDFs, the Center for Due Diligence said fees and risks inherent in TDFs were still on the high side. It also asserted that too few plan sponsors have "performed any meaningful due diligence on their TDFs."
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