Target-date mutual funds are likely to increase in popularity because they are now one of the three approved default options for many retirement plans. In the retirement years, target-date funds become increasingly conservative with higher bond concentrations. Using a bootstrap simulation and rolling period analysis, three target-date fund classifications are shown to have higher probabilities of running out of money and lower balance remaining when compared to fixed allocation portfolios. A fixed 50/50 stock/bond portfolio unambiguously out-performs the target-date funds, regardless of methodology employed. In light of this evidence, these funds should revisit their asset allocation strategy.
Spitzer, John J. and Singh, Sandeep, "Shortfall Risk of Target-date Funds During Retirement" (2008). Business-Economics Faculty Publications. 13.
Spitzer, J. J., & Singh, S. (2008). Shortfall risk of target-date funds during retirement. Financial Services Review, 17(2), 143-153.