Target date fund

(redirected from Target Date Funds)

Target Date Fund

A fund of funds that invests predominantly or exclusively in mutual funds with a certain maturity. For example, a target date fund may hold funds with securities that all mature in 2015. A target date fund is useful when one wishes to have all of one's investments mature on the date of one's retirement.

Target date fund.

A target date fund is a fund of funds that allows you to link your investment portfolio to a particular time horizon, typically your expected retirement date.

In fact, a target date fund characteristically has a date in its name, such as a 2015 Fund or a 2030 Fund.

A target fund aiming at a date in the somewhat distant future tends to have a fairly aggressive asset allocation, with a focus on growth. As the target date approaches, the fund is designed to become more conservative to preserve the assets that have accumulated and eventually to provide income.

Each fund company formulates its own approach to risk, so that the allocation of one 2025 Fund may be noticeably different from the allocation of a 2025 Fund from a different company.

You can find model portfolios and statements of investment strategy in the fund's prospectus. Each mutual fund company that offers target date funds tends to offer a series, with dates five or ten years apart.

Most companies populate their funds of funds with individual funds from their fund family, though some companies add mutual funds or exchange traded funds from other investment companies.

Like other funds of funds, the fees you pay for a target date fund may be higher than you would pay to own each of the individual funds separately. However, these fees pay for an additional level of professional oversight.

References in periodicals archive ?
Generation Y or Millennials - those between the ages of 20 and 37 - are gravitating to Target Date Funds and other asset allocation strategies in ever greater numbers, more so than Gen X (ages 36-48), Baby Boomers (ages 49-68) or the Silent Generation (age 69 and older).
Benchmarking target date funds is important to plan sponsors from a due diligence and fiduciary standpoint, but it's also quite challenging," said Lori Lucas, defined contribution practice leader at Callan.
Powered by data from Morningstar - an unbiased, trusted source of fund research - the enhanced Target Date Compass continues to help plan sponsors determine which target date funds fit their plans' goals.
5 percent of plan sponsors offering target date funds as an investment option, versus 69.
By combining the positive elements of target date funds and managed account programs and avoiding some of their drawbacks, Transamerica's custom target date technology platform can help support a secure retirement for retirement plan participants and address fiduciary responsibilities for plan sponsors.
There are risks involved with investing in the db-X Target Date Funds, including possible loss of principal.
Survey From Voya Financial's Investment Management Business Finds Retirement Plan Participants Using Target Date Funds Also Contribute More
The report also details participant level support for investments: target date funds, managed accounts, custom asset allocation models, etc.
Another important aspect is the tool's ability to show employees' investment returns across a variety of 401(k) retirement strategies, including target date funds, managed accounts, do-it-yourself fund menus and brokerage window options.
As with traditional target date funds, these offerings adjust their asset mix by lessening equity exposure and increasing exposure to fixed income type investments as they approach the target retirement date.
Morgan Asset Management today announced that it has launched a new communications program designed to deliver a simplified explanation of its SmartRetirement series of target date funds, using easy-to-understand terminology supported by animation and infographics.
In fact, BlackRock created the first target date funds in 1993 under its LifePath brand, simplifying risk management and asset allocation, and offers access to these strategies primarily to mega and large DC plans.