Method and System for Evaluating Target Date Funds

• US 20140222714A1
• Filed: 02/07/2013
• Published: 08/07/2014
• Est. Priority Date: 02/07/2013
• Status: Abandoned Application

• 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: Dial, Glenn, Santiago, Katherine, Browne, Mark, Trevisan, Anne Lester, Avitabile, Lynn, Musto, David, Mauck, William I
• Application Number:
  US13/762,096
• Publication Number:
  US 20140222714A1
• Time in Patent Office: Days
• US Class Current: 705/36.R
• 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 for a customer, the method comprising:

presenting a questionnaire to a customer to solicit responses;

determining one or more investment preferences based on the customer'"'"'s responses to the questionnaire, said one or more investment preferences including at least a desired level of risk asset exposure and a desired level of asset class diversification;

generating, by at least one computer processor, a summary of a plurality of target date funds, the summary comprising at least one visual representation of both diversification levels and risk asset ratios associated with the plurality of target date funds, wherein the generating comprises;

creating a coordinate system showing the plurality of target date funds, and

plotting each of the plurality of target date funds on the coordinate system based on their respective diversification levels and risk asset ratios;

comparing said one or more investment preferences with said at least one visual representation; and

identifying a desired type of target date fund based on the comparison.

2. The method of claim 1, further comprising:

selecting or formulating a target date fund based on the comparison.

3. The method of claim 1, wherein said one or more investment preferences further comprises a measure of the customer'"'"'s risk tolerance determined based on the responses to the questionnaire.

4. The method of claim 1, wherein the customer is selected from a group consisting of:

individual investors, institutional investors, and investment plan sponsors.

5. The method of claim 1, further comprising:

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

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

6. The method of claim 5, further comprising:

separating the Cartesian coordinate system into quadrants; and

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

7. The method of claim 6, wherein each of the quadrants represents a similar set of characteristics for the target date funds grouped therein.

8. The method of claim 1, further comprising:

determining visually identifiable groups of target date funds based on the plotting of the plurality of target date funds on the 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.

9. The method of claim 1, further comprising:

aligning measures of the investment preferences with axes of the coordinate system, such that one or more sections of the coordinate system relate to types of target funds commensurate with the corresponding investment preferences.

10. The method of claim 9, wherein the measures of the investment preferences comprise at least one of:

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

11. The method of claim 1, further comprising:

outputting the summary by 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 of at least a portion of the summary.

12. The method of claim 1, further comprising:

saving data associated with the diversification levels and the risk asset ratios in a computer-readable medium accessible by a mobile computing device; and

providing a user interface on the mobile computing device for user interaction with the generated summary.

13. The method of claim 1, wherein the risk asset ratios measuring a percentage of each target date fund allocated to one or more risk assets at or near a corresponding target retirement date.

14. The method according to claim 13, wherein the one or more risk assets are selected from a group consisting of:

stocks,

commodities,

futures,

high yield bonds,

real estate, and

other risky investments.

15. The method according to claim 1, wherein the risk asset ratios are determined from a glide path of each target date fund.

16. The method according to claim 1, wherein the diversification levels are a measure of diversification among asset classes selected from a group consisting of:

large cap equity,

mid cap equity,

small cap equity,

developed international equity,

emerging markets equity,

REITs,

commodities,

U.S. fixed income,

high yield,

TIPS/inflation,

international fixed income, and

emerging markets debt.

19. The method according to claim 1, wherein each of said diversification levels provides a quantified measure of risk associated with a corresponding target date fund.

20. The method according to claim 1, wherein each of said diversification levels is correlated to variations in a return of investment in a corresponding target date fund.

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

at least one computer processor coupled to at least one storage medium, the at least computer processing being adapted to perform the steps of;

presenting a questionnaire to a customer to solicit responses;

determining one or more investment preferences based on the customer'"'"'s responses to the questionnaire, said one or more investment preferences including at least a desired level of risk asset exposure and a desired level of asset class diversification;

generating a summary of a plurality of target date funds, the summary comprising at least one visual representation of both diversification levels and risk asset ratios associated with the plurality of target date funds, wherein the generating comprises;

creating a coordinate system showing the plurality of target date funds, and

plotting each of the plurality of target date funds on the coordinate system based on their respective diversification levels and risk asset ratios;

comparing said one or more investment preferences with said at least one visual representation; and

identifying a desired type of target date fund based on the comparison.

18. A non-transitory computer-readable medium having code for evaluating target date funds, the code executable by a processor to perform the steps comprising:

presenting a questionnaire to a customer to solicit responses;

determining one or more investment preferences based on the customer'"'"'s responses to the questionnaire, said one or more investment preferences including at least a desired level of risk asset exposure and a desired level of asset class diversification;

generating a summary of a plurality of target date funds, the summary comprising at least one visual representation of both diversification levels and risk asset ratios associated with the plurality of target date funds, wherein the generating comprises;

creating a coordinate system showing the plurality of target date funds, and

plotting each of the plurality of target date funds on the coordinate system based on their respective diversification levels and risk asset ratios;

comparing said one or more investment preferences with said at least one visual representation; and

identifying a desired type of target date fund based on the comparison.

21. A computer-implemented method of evaluating target date funds for a customer, the method comprising:

presenting a questionnaire to a customer to solicit responses;

determining one or more investment preferences based on the customer'"'"'s responses to the questionnaire, said one or more investment preferences including at least a level of risk exposure;

generating, by at least one computer processor, a summary of a plurality of target date funds, the summary comprising at least one visual representation of risk asset ratios associated with the plurality of target date funds, wherein the generating comprises;

creating a coordinate system showing the plurality of target date funds, and

plotting each of the plurality of target date funds on the coordinate system based on their respective risk asset ratios and a measure of their risk exposure;

comparing said one or more investment preferences with said at least one visual representation; and

identifying a desired type of target date fund based on the comparison.

22. A computer-implemented method of evaluating target date funds, comprising using at least one processor and at least one storage medium for performing the following operations:

receiving, at a 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 quantified risk 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;

outputting, via a user interface or user medium, a summary of the plurality of target date funds, the summary comprising at least a visual representation of both the risk level and the equity ratio associated with each of the plurality of target date funds to facilitate a comparison among the target date funds; and

selecting or formulating a target date fund based on the comparison and an investor'"'"'s risk tolerance or investment goal, wherein the selecting or formulating comprises;

creating a coordinate system showing at least a subset of the plurality of target date funds, and

plotting each of the subset of the plurality of target date funds on the coordinate system based on their respective risk levels and equity ratios, and

wherein measures of investor risk tolerance or investment goals are derived from an evaluation of a specific investor or investment plan sponsor, and the specific investor or investment plan sponsor can use the coordinate system to locate target date funds that are best suited for the specific investor or investment plan sponsor.

23. A computer-implemented method of evaluating target date funds, comprising using at least one processor and at least one storage medium to perform the following operations:

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

determining a quantified risk level for each of the plurality of target date funds;

determining at least one equity ratio for each of the plurality of target date funds;

outputting a summary of at least a subset of the plurality of target date funds, the summary comprising at least a visual representation of both the risk levels and the equity ratios associated with the subset of the plurality of target date funds to facilitate a comparison among these target date funds, wherein the outputting comprises;

creating a coordinate system showing the subset of the plurality of target date funds, and

plotting each of the subset of the plurality of target date funds on the coordinate system based on their respective risk levels and equity ratios;

determining a customer'"'"'s investment goals or objectives, the customer being selected from a group consisting of;

(a) a sponsor of an investment plan, (b) a participant of an investment plan, and (c) an individual investor,

comparing the customer'"'"'s investment goals or objectives with visually identifiable groups of the plotted target date funds on the coordinate system; and

identifying a desired type of target date fund based on the comparison.