One key consideration with near-dated target funds is that they are managed with the assumption that investors won’t liquidate the day they retire, Benz says. Rowe Price was able to maintain one of the highest spots on this five-year list. Despite the recent volatility in equity markets, T. “More risk has translated into higher returns, but that advantage obviously would become a detriment in an equity-market correction,” she says. Rowe Price has always had one of the more equity-heavy glide paths of any of the target-date options, notes Christine Benz, director of personal finance at Morningstar. “The biggest variation in performance is attributable to different asset allocations - some funds may have more stocks and fewer bonds, or vice versa, compared to competitors,” he says.įor instance, T. “Not all target-date funds are created alike, even if they have the same target date,” says Greg McBride, chief financial analyst at financial website Bankrate. Expense ratios, among other factors, varied widely, too. When we looked at the 20 best-performing target-date funds over the past five years that had 2020 as the specified retirement year, annualized returns ranged from 5.7% to 8%. Comparable target-date funds may all have the same objective, but they are hardly one-size-fits-all.
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