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Finding the Target Date Fund Sweet Spot

With the return of market volatility after a decade of strong equity returns, understanding fiduciary responsibilities and maintaining a prudent process around target date fund evaluation and selection has never been more important.

There is growing awareness that there are pitfalls to solely using passive funds to implement a TDF glidepath and that some active exposure can improve retirement outcomes, leading hybrid TDFs to capture a growing share of TDF assets. The active-per-basis point expense metric can help plan fiduciaries meaningfully compare hybrid TDFs and determine the reasonableness of expenses in the context of the value being provided.

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