Issuers of Canada's Target Funds are taking initiatives to counteract market conditions that have forced the funds almost entirely into fixed income at historically low rates. In an action similar to RBC Canada's at the end of last year, when it issued early rollovers for cashed-out CPPI products, IA Clarington has announced a nine-months-early maturity date for IA Clarington Target Click 2010 Fund of 18 September this year.

When entering after special market events, such products are an effective bond allocation with little upside potential, making them seem less attractive in light of their high early redemption fee and management expense ratios (MER). Issuers have taken various courses of action, including early maturity, closure to new purchases and sometimes a reduction in their MER.

Target Click 2010 promised a return over the investment period equal to the greatest of the three following values: 100% of the capital invested as valued on the start date, the level of the highest recorded monthly reading and the net asset value of the fund on the maturity date. As a target fund approaches its maturity date, its allocation to fixed income is increased and its allocation to equities is reduced.

With no further equity exposure, the fund cannot grow significantly, as summarised by Eric Frape, senior vice president of product and business development for IA Clarington: "It's really limiting the funds' ability to have further upside as they reach the final year of maturity," he said. "We thought it was in the best interest of the fund to accelerate to maturity so investors can take advantage of the guarantee nine months ahead of schedule." If investors do not redeem before September 18, a money market switch will be performed.

At the end of July, Clarington Target Click Funds had C$5.76bn ($5.22bn) under management.

Meanwhile, BMO and Mackenzie Financial funds BMO LifeStage Plus 2015 and 2020, and the four Mackenzie Destination + funds, have closed for new purchases due to the market crash.

Target funds appeared in 2005, with IA Clarington Target Click, and have grown to an estimated AUM of C$14.5bn ($13.15bn) across seven products, according to SRP data.

These products appear on the Canadian database.