Target Date Fund

A target date fund is a mutual fund that automatically shifts the fund owner's asset allocation over time. Target date funds are sometimes referred to as lifecyle funds--not to be confused with life-cycle investing. The "target date" is typically an approximate retirement date for the owner--for example, a 2030 fund. Asset allocations are generally more aggressive and equity-oriented for younger investors. The asset allocation will become less aggressive and more oriented towards fixed income investments as the participant ages. The Pension and Protection Act of 2006 allows target-date funds to serve as a default option in 401k plans, resulting in a significant increase in participation rates. Target-date funds have been the subject of some criticism and controversy in the wake of the financial crisis as many of the presumably more conservative funds for near-retirees suffered meaningful losses.

MetLife is Nudging the World of Defined Contribution toward Income Annuities

Jody Strakosch is the National Director for MetLife’s Retirement Products Group.  In this role, Jody has a broad perspective on developments in the institutional space.  In other words, Jody is intimately familiar with how in-plan accumulation and point of retirement annuities are evolving in the defined contribution arena. 



Ten Questions to Ask When a Financial Advisor Says: "You Know I'm Not a Big Fan of Annuities"

Many financial advisors seem conditioned to wear...

Annuities in Target Date Funds

A recent Wall Street Journal article (click here to read--subscription required) discusses


In-Plan Annuities

It is reported that asset manager BlackRock has created a target date fund offering with an annuity for defined contribution pension plans.


Target Date Funds Enhanced by Junk

It turns out that many target date funds are juiced by high yield or "junk" bonds. The issue is that target date funds (which presumably become more conservative over time as participants age) are riskier than what is generally perceived by consumers, regulators and financial advisors. This higher level of risk is consistent with the higher than expected volatility and losses experienced by many target date funds during the financial crisis. According to a recent Bloomberg article, up to 35...
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