An Upgrade for the T. Rowe Price Retirement Target-Date Series

The following is our latest Fund Analyst Report for T. Rowe Price Retirement target-date series. Morningstar Premium Members have access to full analyst reports such as this for more than 1,000 of the largest and best mutual funds. Not a Premium Member? Gain full access to our analyst reports and advanced tools immediately when you try Morningstar Premium free for 14 days.

The topnotch management team on the T. Rowe Price Retirement target-date series has capably begun the transition to its new equity glide path, the result of an exhaustive research effort that demonstrated the firm's vast capabilities. Confidence in the team's execution drives a Morningstar Analyst Rating upgrade to Gold for the series' two cheapest share classes, while the two more expensive are rated Bronze.

This series has always stood out from peers. The team has consistently advocated for higher equity allocations for investors, and in 2020 announced that the series would start with a 98% allocation to equities, up from 90%. It took advantage of stock market volatility in April 2020 to begin to increase the weighting, and it is now more than halfway to the new starting point. Underlying that conviction in equities has been work from the firm's research group that shows investors are able to tolerate higher volatility, which has given the team the confidence to boost allocations to stocks.

Lead manager Wyatt Lee brings the team's research to bear in this series. The 20-plus year T. Rowe Price veteran stepped into the lead role following Jerome Clark's departure at the start of 2021, a move that had been telegraphed far in advance. Kim DeDominicis and Andrew Jacobs van Merlen join him as comanagers; each has more than 15 years of experience at the firm. A deep and well-credentialed multi-asset research team of more than 25 investment professionals support them here.

The team allocates to some of T. Rowe Price's best funds: 78% of series assets are in Morningstar Medalist funds, the majority being equity funds. Less proven are the fixed-income holdings, including Neutral-rated T. Rowe Price New Income PRCIX. This core holding fell 3.0% in the first quarter of 2020, which, combined with the high equity exposure, led to bottom-quartile performance for the fixed-income-heavy vintages. The team made up for that underperformance in the subsequent rebound, but note that this series' upside potential comes with slightly more risk than peers.