Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Are All Target Date Funds Created Equal?

Posted by William Byrnes on May 6, 2011


Not according to a recent U.S. Government Accountability Office (GAO) report which found that annualized returns on a variety of funds with the same target date vary wildly—some with gains as high as 28% and others with losses of up to 31%. Target date funds, which “are designed to provide an age-appropriate asset allocation for plan participants over time,” are essentially an investment advisor substitute. But, unlike a personal financial advisor, target date funds can’t take into consideration the individualized needs of investors and don’t offer investors the level of disclosure that’s mandated of registered investment advisors.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of target date funds in Advisor’s Journal, see Are Target-Date Funds Failing (CC 09-35)Missing the Target? (CC 07-59), & The Automatic IRA Act of 2010: Boon for Advisors? (CC 10-56).

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