State Farm Mutual Fund Lawsuit

State Farm Investment has been sued for allegedly breaching its fiduciary duty to those who invested in its target date mutual funds, specifically known as LifePath Funds. According to the lawsuit, the company collected excessive management fees, causing a “dramatic decrease” in returns to investors over time.

Why Was State Farm Sued?

The lawsuit alleges that State Farm violated a law known as The Investment Company Act of 1940. The law was enacted to regulate mutual funds and curb abuses in the investment industry. According to the lawsuit, State Farm broke its fiduciary duty under the Act with respect to the fees it collected for the mutual funds’ “management services.” The lawsuit says that not only are the fees excessive, but that “it is difficult to determine what management services, if any, State Farm provides to the LifePath Funds.”

Which Funds Are Affected?

The mutual funds at issue in the case are known as target date mutual funds. They’re specifically called “LifePath Funds” and are a group of fifteen separate funds issued by State Farm. They include:

With a “target date” mutual fund, an investor will decide that he or she wants to retire by or near a certain year, for instance 2030, and therefore will select the appropriate fund – in this case, the LifePath2030 fund.

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