Yeah, I hate TDFs and here is another reason why


It is a well-known fact that I don’t like Target Date Funds (TDFs). It springs from the market meltdown in 2008-2009 when it was realized that during a bear market, certain 2015-2020 funds had a huge exposure to equity.


Plus there was no equity exposure consistency between different fund family’s TDFs, even if they had the same year on the fund title. Another reason I hate TDFs is because of the glide path, people live a lot longer these days than their retirement date.


The whole idea behind TDFs is that it is a one-stop shop investment. It’s supposed to be for participants who get confused about asset allocation or as the qualified default investment. Yet a recent John Hancock study shows that 25% of all 401(k) investors invest in other funds besides their TDF investment. That a lot of people doing things wrong and defeats the whole purpose of a TDF.

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