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S&P Target Date Scorecard How effective is your defined contribution plan?
BY Louis Bellucci

• The S&P Target Date® Scorecard provides performance comparisons, equal- and asset-weighted category averages, and analytics covering the target date fund (TDF) universe.

• Past performance of the “Through” glide path category, as represented by the S&P Target Date Through benchmarks, is significantly different from that of the “To” category, as represented by the S&P Target Date To benchmarks. This is because of generally higher equity allocations within the Through TDFs. Report 4 shows the difference in three-year annualized total returns between the To and Through benchmarks by vintage. The maximum difference of 1.58% occurred in the 2015 vintage, while the minimum was in 2060+.

• As has been the case in past scorecards, most asset-weighted average TDF returns continued to be higher than equal-weighted returns over one-, three-, and five-year time horizons. This indicates that some larger TDFs earned relatively higher returns than some of the smaller counterparts. Among other factors (such as differences in net expenses), this may reflect greater equity allocations in larger TDFs during the U.S. equity market rally since early 2009.

• The S&P Target Date Index Series is a representative benchmark for TDFs. The series is used extensively throughout the report and distinguishes itself from peer group benchmarks because it is investable, comprises consensus-derived asset allocation weights, and its composition is known in advance of evaluation periods.

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