10 Best Funds for Your Retirement

NEW YORK ( TheStreet Ratings) -- TheStreet.com Ratings reviews the risk-adjusted return performance of around 25,000 funds every month. There is no time like the present to select from among the best rated asset allocation funds to build a retirement nest egg.

If you are planning to retire in about 30 years, take a look at the following funds targeted for a retirement in the year 2040. Each of the fund families offers additional funds with a variety of retirement dates attempting to match your particular retirement date goal. The benefit of holding a target date fund is that, over time, the allocation of the portfolio becomes more conservative by shifting from stocks to bonds.

Here are the 10 best 2040 retirement funds:

-----------------------------

10. John Hancock Funds II Lifecycle 2040 Portfolio R1

John Hancock Funds II Lifecycle 2040 Portfolio R1 ( JLIDX) seeks high total return until its target retirement date. The fund which is a fund of funds, invests, substantially all of its assets in underlying funds using an asset allocation strategy designed for investors expected to retire in 2040.

Expense Ratio: 1.98%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

-----------------------------

9. Oppenheimer Transition 2040 N

Oppenheimer Transition 2040 N ( OTINX) has an investment objective to seek total return until the target retirement date included in its name and then seeks income and secondarily capital growth. The fund is a fund of funds which invests in diversified portfolio of underlying funds. The fund may invest 85% of its assets in equity securities and 15% in fixed income securities and other securities.

Expense Ratio: 1.66%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

-----------------------------

8. PIMCO RealRetirement 2040 R

PIMCO RealRetirement 2040 R ( POFRX) seeks to maximize real return, consistent with preservation of real capital during the accumulation years and current income during the retirement years. The fund seeks to achieve its investment objective by investing in underlying funds. The fund may invest up to 30% of its total assets directly in securities denominated in foreign currencies and may invest beyond this limit in US dollar-denominated securities of foreign issuers. The fund may invest up to 15% of its total assets directly in securities and instruments that are economically tied to emerging market countries. The fund may limit its foreign currency exposure to 20% of its total assets.

Expense Ratio: 2.02%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

-----------------------------

7. American Funds 2040 Target Date Retirement Fund R3

American Funds 2040 Target Date Retirement Fund R3 ( RCKTX) is designed for investor retiring around 2040. Investing in this fund may be a prudent way to save for retirement in a single fund. The fund seeks to provide a balance of growth, income, and capital conservation that gets more conservative over time. The portfolio becomes more income-oriented as the fund approaches and passes its target date. The fund will invest around 40 percent of its assets in growth funds, 10 percent in equity income & balanced funds, 45 percent in growth and income funds, and 5 percent in bond funds.

Expense Ratio: 1.24%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

-----------------------------

6. MassMutual RetireSMART 2040 S

MassMutual RetireSMART 2040 S ( MFRSX) seeks to achieve a high total rate of return on an annual basis. The fund seeks to achieve its investment objective by investing in a combination of Mass Mutual equity, fixed income, and money market funds using an asset allocation strategy designed for investors expecting to retire around the year 2040. Assets are allocated among underlying Select funds and Premier funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 25% in equity funds and 75% in fixed income funds.

Expense Ratio: 0.98%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

-----------------------------

5. USAA Target Retirement 2040 Fund

USAA Target Retirement 2040 Fund ( URFRX) has an investment objective to provide capital appreciation and current income consistent with its current investment allocation. The fund attempts to achieve its objective by investing in a diversified portfolio of underlying mutual funds according to an asset allocation strategy designed for investors planning to start withdrawing funds for retirement in or within a few years of the Funds target date included in its name.

Expense Ratio: 0.79%

Load: 0.00%

Rated "C+" by TheStreet Ratings:

----------------------------

4. Fidelity Income Replacement 2040 Fund

Fidelity Income Replacement 2040 Fund ( FIRWX) seeks total return through combination of current income and capital growth. The fund is a fund of funds. The fund may invest in a combination of underlying Fidelity equity, fixed income and short term funds using an asset allocation strategy.

Expense Ratio: 0.65%

Load: 0.00%

Rated "B-" by TheStreet Ratings:

-----------------------------

3. MFS Lifetime 2040 I

MFS Lifetime 2040 I ( MLFIX) has an investment objective to seek a high level of total return consistent with its asset allocation until the approximate retirement year. The fund seeks total return through a combination of current income and capital appreciation. The fund is designed to provide diversification among different asset classes by investing the majority of its assets in other mutual funds. The fund may invest 80% of its assets in U.S. stock funds and 20% of its assets in international stock funds. The fund also may invest in bond funds and money market funds.

Expense Ratio: 1.26%

Load: 0.00%

Rated "B" by TheStreet Ratings:

-----------------------------

2. T Rowe Price Retirement 2040

T Rowe Price Retirement 2040 ( TRRDX) seeks highest total return over time consistent with an emphasis on both capital growth and income. The fund pursues this objective by investing in a diversified portfolio of T. Rowe Price stock and bond funds. The allocation between T. Rowe Price stock and bond funds will change over time. The fund invests in a diversified portfolio consisting of about 90% stocks and 10% bonds with both an increasing allocation to bonds and an increasing emphasis to short-term bonds over time.

Expense Ratio: 0.76%

Load: 0.00%

Rated "B+" by TheStreet Ratings:

-----------------------------

1. Invesco Balanced-Risk Retirement 2040 R

Invesco Balanced-Risk Retirement 2040 R ( TNDRX) has an investment objective to provide capital appreciation and current income, consistent with its current asset allocation. The fund is a fund of fund. The fund seeks to meet its investment objective by building a portfolio of underlying funds. The fund is structured for investors whose target retirement dates are around the year 2040. The fund asset allocation strategy invests primarily in domestic equity funds. The fund may also invest in foreign equity funds and to a lesser extent in fixed income funds.

Expense Ratio: 2.46%

Load: 0.00%

Rated "A" by TheStreet Ratings:

-----------------------------

How We Rate Funds

TheStreet Ratings condenses the available fund performance and risk data, including penalties for load charges, into a single composite opinion of each fund's risk-adjusted performance. This allows the unbiased identification of those funds that have historically done well and those that have underperformed the market. While there is no guarantee of future performance, these investment ratings provide a solid framework for making informed, timely investment decisions. In order to qualify for a rating, an open-end fund must either have three years of risk and return data or be an additional share class of an existing fund with at least three years of performance statistics.

Funds rated "A" or "B" are considered "Buy" based on a track record of higher than average risk-adjusted performance. Funds at the "C" level are rated as "Hold," while underperformers at the "D" and "E" levels our model ranks as "Sell."

-- -- Written by Kevin Baker in Jupiter, Fla.

MORE FROM THESTREET RATINGS:


Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

More from Investing

3 Simple Tips on Investing From TheStreet's Jim Cramer

3 Simple Tips on Investing From TheStreet's Jim Cramer

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

After PayPal Buys iZettle, Pay-Tech Firms Could Process These Deals

After PayPal Buys iZettle, Pay-Tech Firms Could Process These Deals

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons