Method and System for Evaluating Target Date Funds

• US 20090327155A1
• Filed: 11/12/2008
• Published: 12/31/2009
• Est. Priority Date: 06/30/2008
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Mauck, William I., Trevisan, Anne Lester, Musto, David, Browne, Mark, Avitabile, Lynn, Dial, Glenn, Santiago, Katherine
• Granted Patent: US 8,255,308 B2
• Time in Patent Office: Days
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The invention generally concerns systems, methods, and apparatus wherein a computer may receive information concerning a group of target date funds from a database. Information about the target date funds may comprise information about the glide path and the target retirement date of that fund. A diversification level of each of the target date funds may be determined from the received information. An equity ratio may also be determined for each of the target date funds using the received information. In some instances, the equity ratio may be based upon the amount of equity projected to be owned by the target date fund upon the target retirement date. After determining an equity ratio and a diversification level, a summary of the group of funds is output for review by a user. The summary may include a summary or graph of the diversification levels and equity ratios of the target date funds.

Claims

1. A computer-implemented method of evaluating target date funds, comprising:

receiving, at a first computer from at least one database, information concerning a plurality of target date funds, wherein each target date fund comprises a glide path and a target retirement date;

determining a diversification level of each of the plurality of target date funds;

determining an equity ratio of each of the plurality of target date funds, wherein the equity ratio is based on the glide path allocation of each of the plurality of target date funds upon the target retirement date; and

outputting a summary of the diversification levels and the equity ratios of each of the plurality of target date funds.

2. The method of claim 1, wherein outputting the summary of the diversification levels and the equity ratios of each of the plurality of target date funds comprises:

creating a Cartesian coordinate system, wherein one axis measures equity ratios and another axis measures diversification levels;

plotting each of the plurality of target date funds on the Cartesian coordinate system based on their respective diversification levels and equity ratios.

3. The method of claim 2, wherein outputting the summary of the diversification levels and the equity ratios of each of the plurality of target date funds further comprises:

separating the Cartesian coordinate system into quadrants; and

grouping funds from the plurality of target date funds into the quadrants based on their plotting on the Cartesian coordinate system.

4. The method of claim 3, wherein each of the quadrants represents a similar set of characteristics for the target date funds grouped therein.

5. The method of claim 2, wherein outputting the summary of the diversification levels and the equity ratios of each of the plurality of target date funds further comprises:

determining visually identifiable groups of target date funds based on the plotting of all target date funds on the Cartesian coordinate system; and

creating groupings of the visually identifiable groups;

wherein each of the groupings represents a similar set of characteristics for the target date funds grouped therein.

6. The method of claim 2, wherein outputting the summary of the diversification levels and the equity ratios of each of the plurality of target date funds further comprises:

aligning measures of investor risk tolerance or investment goals with the axes of the Cartesian coordinate system, such that sections of the Cartesian coordinate system relate to types of investors with corresponding risk tolerance or investment goals.

7. The method of claim 6, wherein the measures of investor risk tolerance or investment goals comprise at least one of the group consisting of:

desired asset class diversification, scored asset class diversification level, desired percent of equities, scored percent of equities level, and risk-adjusted return.

8. The method of claim 6, wherein the measures of investor risk tolerance or investment goals are derived from an evaluation of a specific investor or investment plan sponsor, such that the specific investor or investment plan sponsor may use the Cartesian coordinate system to locate target date funds that are best suited for the specific investor or investment plan sponsor.

9. The method of claim 1, wherein outputting comprises one of the group consisting of:

printing, drawing to a display device, storing to a computer-readable medium, reciting via audio, creating an audiovisual work, displaying via web page, or creating a presentation.

10. The method of claim 1, wherein outputting the summary of the diversification levels and the equity of ratios of each of the plurality of target date funds comprises grouping the plurality of target date funds into at least two subgroups of target date funds.

11. The method of claim 1, wherein the equity ratio is a first equity ratio, and further comprising:

determining a second equity ratio of each of the plurality of target date funds, wherein the second equity ratio is based on the glide path allocation of each of the plurality of target date funds upon a date before the target retirement date.

12. The method of claim 11, wherein the second equity ratio is based on the glide path allocation that is one of the group consisting of:

five years before the target retirement date, ten years before the target retirement date, fifteen years before the target retirement date, twenty years before the target retirement date, the date of evaluation of the target date fund, or the date of an investment in the target date fund.

18. The system of claim 4, wherein the output device further visually aligns measures of investor risk tolerance or investment goals with the axes of the Cartesian coordinate system, such that sections of the Cartesian coordinate system relate to types of investors with corresponding risk tolerance or investment goals.

19. The system of claim 18, wherein the measures of investor risk tolerance or investment goals comprise at least one of the group consisting of:

desired asset class diversification, scored asset class diversification level, desired percent of equities, scored percent of equities level, and risk-adjusted return.

20. The system of claim 18, wherein the measures of investor risk tolerance or investment goals are derived from an evaluation of a specific investor or investment plan sponsor, such that the specific investor or investment plan sponsor may use the Cartesian coordinate system to locate target date funds that are best suited for the specific investor or investment plan sponsor.

13. A system for evaluating target date funds, comprising:

a network interface for connecting with at least one database to receive information concerning a plurality of target date funds, wherein each target date fund comprises a glide path and a target retirement date;

a processor, in communication with the network interface, for determining a diversification level and an equity ratio of each of the plurality of target date funds, wherein the equity ratio is based, at least in part, on the glide path allocation of each of the plurality of target date funds upon the target retirement date; and

an output device, in communication with the processor, for outputting a summary of the diversification levels and the equity ratios of each of the plurality of target date funds.

14. The system of claim 13, wherein the output device plots each of the plurality of target date funds on a Cartesian coordinate system based on each target date fund'"'"'s diversification level and equity ratio.

15. The system of claim 14, wherein the output device further separates the Cartesian coordinate system into quadrants and groups the target date funds into the quadrants based on their location on the Cartesian coordinate system.

16. The system of claim 15, wherein each of the quadrants represents a similar set of characteristics for the target date funds grouped therein.

17. The system of claim 14, wherein the output device further creates visually identifiable groupings of target date funds based on the relative location of the target date funds on the Cartesian coordinate system, wherein each of the groupings represents a similar set of characteristics for the target date funds grouped therein.

21. The system of claim 13, wherein the output device is a printer, a display, a computer-readable medium, a speaker, a web page, or a computer.

22. The system of claim 13, wherein the output device identifiably groups the plurality of target date funds into at least two subgroups of target date funds.

23. The system of claim 13, wherein the processor further determines a second equity ratio of each of the plurality of target date funds, wherein the second equity ratio is based on the glide path allocation of each of the plurality of target date funds upon a date before the target retirement date.

24. The system of claim 23, wherein the second equity ratio is based on the glide path allocation that is one of the group consisting of:

five years before the target retirement date, ten years before the target retirement date, fifteen years before the target retirement date, twenty years before the target retirement date, the date of evaluation of the target date fund, or the date of an investment in the target date fund.

25. The system of claim 13, wherein the output device is located remotely from the processor and the network interface.

26. A apparatus for evaluating target date funds, the apparatus created through the steps comprising:

receiving, at a first computer from at least one database, information concerning a plurality of target date funds, wherein each target date fund comprises a glide path and a target retirement date;

determining a diversification level of each of the plurality of target date funds;

determining an equity ratio of each of the plurality of target date funds, wherein the equity ratio is based on the glide path allocation of each of the plurality of target date funds upon the target retirement date; and

outputting a grid, wherein the grid contains mappings of the diversification levels against the equity ratios of each of the plurality of target date funds.

27. A method of evaluating target date funds for an entity, comprising:

presenting an investor with a series of questions relating to the entity'"'"'s investment goals;

receiving, from the entity, responses to the series of questions relating to the entity'"'"'s investment goals;

determining an equity exposure measure of the entity based off of the responses;

determining an asset class diversification measure of the entity based off of the responses; and

matching the equity exposure measure and the asset class diversification measure with one or more target date funds using a graph;

wherein the graph illustrates a summary of equity exposure ratios and asset class diversification levels of each of a plurality of target date funds.

28. The method of claim 27, wherein the equity exposure measure reflects the level of equity exposure the entity is willing to accept in an optimal target date fund at a predetermined date.

29. The method of claim 27, wherein the asset class diversification measure reflects the level of diversification across various asset classes that the entity desires in an optimal target date fund at a predetermined date.

30. A system for evaluating target date funds for an entity, comprising:

an investment goal presentation module, for presenting an entity with a series of questions related to the entity'"'"'s investment goals;

an investment goal determination module, for determining an equity exposure measure and an asset class diversification measure of the entity; and

a target date fund matching module, for matching the equity exposure measure and the asset class diversification measure with one or more target date funds;

wherein the investment goal determination module receives answers from the entity related to the questions presented by the investment goal presentation module.

31. The system of claim 30, wherein the target date fund matching module is a graph of a plurality of target date funds, wherein the graph further comprises at least two axes, and wherein the at least two axes comprise a first axis related to equity exposure ratios and a second axis related to asset class diversification levels.

32. The system of claim 30, wherein the equity exposure measure reflects the level of equity exposure the entity is willing to accept in an optimal target date fund at a predetermined date.

33. The system of claim 30, wherein the asset class diversification measure reflects the level of diversification across various asset classes that the entity desires in an optimal target date fund at a predetermined date.