Subject: File No. S7-08-10
From: Charles Miller
Affiliation: Financial Services Communications Consultant

April 7, 2014

An asset allocation fund is not one fund but a fund of funds, and the spectrum of funds in either the equity or debt class can be quite varied, and possibly, quite risky.

For example, a typical equity allocation in an age 60 "through" target date fund could be 60% SP 500 Index Fund, 20% Russell 2000 Fund, and 10% EAFE Fund, 10% Emerging Markets Fund. It also could be 10% SP 500 Fund, 20% Russell 2000 Fund, 30% EAFE Fund, and 40% Emerging Markets Fund. One would seem to have considerably more risk than the other.

It's not enough to show the asset allocations of a fund at the class level when the component funds are so critical to the risk profile.

Instead of a simple glide path illustration of the equity/debt percentages, I suggest a graph with five-year "waypoints" that show not only the classes but also the types of equity and debt, and a simple description of risk. You would have your glide path when you connect the waypoints.

Using the example above, the age 60 waypoint would show a class asset allocation of 50% equity/50% debt and a risk rating of 5 (1 low, 10 high) or moderate, and be plotted on the graph.

Also the waypoiont description would show the equity allocation of 80% Growth and Income Funds and 20% International Funds with a risk rating of 5 or moderate.

It would not be in the best interest of asset allocation fund investors, most of whom are fairly unsophisticated 401(k) participants, to have too much detail about funds or risk, since that would likely cause them to stop reading the charts. The charts need to be simple, but not too simple as to keep critical information from investors.

I've done hundereds of 401(k) education meetings attempting to describe what mutual funds are, what they contain, and how they work. Asset allocation funds are very different than "normal" mutual funds and investors need additional help in making sound judgements. A well-executed "waypoint" graph with the appropriate detail could be very beneficial.