When it comes to benchmarking target-date funds, we believe there has been a lack of concrete methodology for investors to reference when developing a target-date fund family. There may be a tendency to view funds with the same target-date year as a homogenous group despite their varying characteristics. Now that a wide range of target-date benchmarks are available, this paper seeks to address relatively simple-to-calculate measures for helping to identify a best-fit benchmark.
In this report, you will learn:
The qualitative measures to help determine if a target-date benchmark is appropriate for a plan
How to evaluate three quantitative measures when selecting a benchmark
Our framework for assessing proper glide path fit