Target-date fund adoption is high and will continue to rise among plan sponsors and consultants for defined contribution plans, according to a new report by Vanguard, Greenwich Associates and Research Now.
Plan sponsors and consultants were interviewed about their attitudes about target-date funds earlier this year. What the online survey found is that among those who don't offer TDFs, 58 percent plan to add the investments over the next two years.
"Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date," According to the report.
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