Target date fund


Also found in: Acronyms.

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 ?
The third component that makes TargetFit different from the traditional target date fund: It uses ETFs as the underlying investments.
Based on this analogy, one can see why target date funds have grown in popularity, particularly in 401(k) plans.
The average 401(k) plan offers twenty-five investment choices, including thirteen stock funds, three bond funds, six target date funds, and one money-market/stable value fund.
We look forward to working with Northern Trust and share a common point of view on the primary objective for Target Date funds, said Rick Fulford, Head of Retirement at PIMCO.
Here is an example of how DIAs could provide lifetime income from a target date fund offered by an employer-sponsored retirement plan.
Designed to expand the use of income annuities in 401(k) plans, the change makes clear that plan sponsors can include deferred income annuities in target date funds used as a default investment
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Large defined contribution plans tend to be "incubators" for new retirement products, according to Cerulli, pointing to automatic features and adoption of target date funds as examples.
The growth of target date fund assets in 401 (k) plans from 2006 to 2013.
Through the late 1990s and early 2000s, participants were introduced to target date funds. These funds were introduced to participants with a "set it and forget it" approach and a guaranteed way to get to retirement.
The researchers conclude that for target date fund performance, "adding a dynamic component to the glidepath combined with an earnest effort to boost deferral rates appears to have the potential to deliver the biggest bang for the buck."