Fund Evaluator:

American Funds 2040 Trgt Date RetireR-2E Overview

American Funds 2040 Trgt Date RetireR-2E (RBEKX) is an actively managed Allocation Target-Date 2040 fund. Capital Group launched the fund in 2014.

The investment seeks growth, income and conservation of capital. The fund normally invests a greater portion of its assets in fixed income, equity-income and balanced funds as it approaches and passes its target date. The advisor attempts to achieve its investment objectives by investing in a mix of American Funds in different combinations and weightings. The underlying American Funds represent a variety of fund categories, including growth funds, growth-and-income funds, equity-income funds, balanced funds and fixed income funds. The fund categories represent differing investment objectives and strategies.

About American Funds 2040 Trgt Date RetireR-2E (RBEKX)

There are 8 members of the management team with an average tenure of 6.08 years: Wesley Phoa (2012), Michelle Black (2020), William Robbins (2024), Shannon Ward (2021), Samir Mathur (2020), Jessica Spaly (2023), Raj Paramaguru (2024), David Hoag (2020). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: S&P 500 (TR) (1970) index with a weighting of 100% and Bloomberg US Agg Bond TR USD index with a weighting of 100%. American Funds 2040 Trgt Date RetireR-2E has 27 securities in its portfolio. The top 10 holdings constitute 64.2% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.

American Funds 2040 Trgt Date RetireR-2E is part of the Allocation global asset class and is within the Allocation fund group. American Funds 2040 Trgt Date RetireR-2E has 25.0% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 53.1%. There is 22.3% allocated to foreign stock, and 0.4% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 18.7% (15.9% domestic bond, 2.8% foreign bond and 0.0% convertible bond). American Funds 2040 Trgt Date RetireR-2E has 5.0% of the portfolio in cash.

Assets Under Management

The fund has $424 million in total assets, which is below the $1 billion average for the Target-Date 2040 category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

RBEKX Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The American Funds 2040 Trgt Date RetireR-2E expense ratio is high compared to funds in the Target-Date 2040 category. American Funds 2040 Trgt Date RetireR-2E has an expense ratio of 1.15%, which is 71% higher than its category average, making the fund expense ratio grade a F. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. American Funds 2040 Trgt Date RetireR-2E has a portfolio turnover rate of 10%, indicating that holds its assets around 0.1 years. By way of comparison, the average portfolio turnover is 22% for the Target-Date 2040 category.

Recently, in the month of July 2026, American Funds 2040 Trgt Date RetireR-2E returned -1.1%, which earned it a grade of D, as the Target-Date 2040 category had an average return of -0.8%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.

American Funds 2040 Trgt Date RetireR-2E has a trailing yield of 0.42%, which is below the 1.91% category average. The fund normally distributes its income annually and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

American Funds 2040 Trgt Date RetireR-2E Grades

Year to date, the fund has returned 7.7%, 1.1 percentage points worse than the category, which translates into a grade of D. The fund has returned 15.5% over the past year (grade of D), 14.8% over the past three years (grade of B) and 8.0% per year over the past five years (grade of B) and 10.5% per year over the past 10 years (grade of B).

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