The brief’s key findings are:
- While nearly 60 percent of new 401(k) participants have savings in target date funds (TDFs), little research has looked under the hood of this investment vehicle.
- This analysis uses a unique dataset with extensive information on the underlying mutual funds that TDFs hold.
- The results show that TDFs:
- often invest in specialized assets (e.g., emerging markets and real estate);
- charge fees that are only modestly higher than if an individual investor assembled a similar portfolio on his own; and
- earn returns that are broadly in line with other mutual funds.