What is Principal Funds?


Quick Answer

Principal Funds is a global firm that offers financial services to individual and institutional investors. Strategic asset allocation and retirement planning are two of the services the company provides, as Principal Funds explains.

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Full Answer

As of 2015, Principal Funds has $331 billion of assets under its management. Investments come from 70 countries, and the firm manages them in portfolios that target risk and retirement goals, as Principal Funds reports. It also manages investments for specific individual goals, and its activities include overseeing large-cap equity, real-estate and exchange-traded funds.

To target risk, the firm offers Strategic Asset Management portfolios, notes Principal Funds. In the flexible income portfolio, it allocates 55 percent to 95 percent of assets to fixed-income funds. For a balanced portfolio, it allocates 20 percent to 60 percent to fixed-income funds. However, in the conservative growth portfolio, it allocates less than 40 percent to fixed-income funds.

For retirement, Principal Funds offers LifeTime funds in which the firm makes investments for retirement goals. The Principal LifeTime 2030 fund allocates assets for individuals planning to retire by 2030. For diversification, it invests in domestic and foreign equity as well as real-estate funds, according to Principal Funds. The LifeTime Strategic Income Fund makes these types of investments, but it is designed for individuals older than 65, the typical retirement age.

For individual investment strategies, the company offers many options. One is an ETF that allocates 55 percent of assets to U.S. high-yield bonds; 13 percent to U.S. mortgage-backed securities; and the remaining to MLPs, REITs and preferred stock, as Principal Funds explains.

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