The Problem with Target Date Funds

Abstract

Target date funds are popular among many employers and fund managers. They are marketed as age-appropriate diversified portfolios and promoted as sophisticated easy-to-use funds.

However, TDFs are no panacea. They are controversial among financial economists, insufficiently regulated, and sometimes costly and poorly diversified. 2008 further highlighted some of the serious structural problems with TDFs as default retirement investments and raised questions as to whether Department of Labor fiduciary relief should be revoked.