The proliferation of target date fund (TDF) varieties can
confuse many plan sponsors. One survey found that while nearly
two-thirds of plan sponsors consider investment performance the
most important selection criterion when choosing a TDF for their
participants, more than half are not confident that they have a
solid basis for benchmarking the TDFs against other similar funds
in the marketplace. One of the biggest challenges is segmenting
competing TDFs into logical categories for comparative performance
analysis purposes.
What's the Difference?
When TDFs were first introduced, they were typically divided
into two basic groups, according to their glide path:
"to" or "through" retirement. Under the
"to" framework, the TDF's goal is to minimize
participants' investment risk in stages until they reach
retirement age (also called the "landing point"). At that
time, the funds would be minimally exposed to market volatility,
allowing participants to decide for
