Is There A Place For Stable Value In Target Funds?
Target Funds, sometimes referred to as Target Date Funds, are a relatively recent investment innovation. They allow a participant to identify the year fund closest to which they expect to retire and then rely upon the manager of the Target Fund to manage the portfolio strategically aiming toward the beginning of distributions in that target retirement year. For example, if a “20 something” age participant identifies 2045 as the closest year to when they expect to retire, the strategic mix may initially be set at 10% fixed income and the remaining 90% in a diversified spectrum of equities. Each calendar quarter, the manager would rebalance to the strategic mix and each year the strategic mix it self would be adjusted slightly to reflect the somewhat shortened investment horizon.
