How to Evaluate Target-Date Funds: A Practical Guide

The article describes and showcases a framework to analyze life-cycle, or target-date, investment strategies with intuitive, practical metrics. Anchored in the complex theory of life-cycle investing, we propose a comprehensive collection, or “dashboard,” of measures to capture various aspects of the...

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Bibliographic Details
Published inThe journal of retirement Vol. 6; no. 4; pp. 68 - 81
Main Authors Gabudean, Radu Constantin, Weiss, Richard A.
Format Journal Article
LanguageEnglish
Published London Pageant Media 31.05.2019
Subjects
Design
Equity
Investment
Lifecycle funds
Retirement plans
Success
Theory
Utility functions
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Summary:The article describes and showcases a framework to analyze life-cycle, or target-date, investment strategies with intuitive, practical metrics. Anchored in the complex theory of life-cycle investing, we propose a comprehensive collection, or “dashboard,” of measures to capture various aspects of the problem: wealth-focused versions of return and risk concepts; the link between retirement contributions and portfolio returns; the strategy’s ability to support income in retirement; and behavior around retirement, a period when risk to invested wealth is greatest. These metrics are synthesized into one holistic view based on investor-specific preferences, highlighting the connection between investor characteristics and the life-cycle investment problem. TOPICS: Wealth management, long-term/retirement investing, pension funds
ISSN:2326-6899
2326-6902
DOI:10.3905/jor.2019.1.048