Target Date Fund Benchmarks
13 Pages Posted: 2 Jul 2018
Date Written: June 12, 2018
At $2 trillion and growing, target date funds have become the most important investment in 401(k) plans, yet these funds are still in their infancy, having effectively launched with the Pension Protection Act of 2006. Importantly there is not yet a standard benchmark for evaluating TDF performance. Nevertheless, fiduciaries must monitor and evaluate their TDF selection.
This article describes the benchmarks that are currently available and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated.
Keywords: target date funds, 401(k), benchmarks
JEL Classification: G2,G11
Suggested Citation: Suggested Citation