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Abstract
Target date funds (TDFs) provide a simple way to obtain an asset allocation that matches the current and future needs of an average investor with a specific retirement date. This article examines the differences between TDFs with the same target date but from different fund providers and finds considerable differences in asset allocations, risk, performance, and other fund characteristics. These differences are partially predictable based on the information in fund prospectuses; however, TDFs often deviate from the planned asset allocations. Investors and advisors should be aware that TDFs with the same target date can vary dramatically, warranting additional research when selecting between TDFs and then monitoring chosen TDFs’ asset allocations in the future. Potential solutions to these concerns include increased guidance from regulators, greater discernment from employers in employer retirement plan investment options, and more descriptive fund names.
TOPICS: Retirement, portfolio construction, performance measurement, legal/regulatory/public policy
- © 2019 Pageant Media Ltd
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600