The firm’s 2015 Defined Contribution Investment Trends study shows both sponsors and advisors are keyed in on lowering costs.

That should surprise no one familiar with the DC industry. But the study also showed sponsors are placing a high priority on short-term performance when selecting funds.

About 60 percent of sponsors said they looked at a track record of three years or less when selecting funds, and nearly 75 percent said they put a manager on review for underperforming peers over a one to three year basis.

“That’s a pretty short leash,” writes Ryan Mullen, head of defined contribution investments at MFS, in a blog post.

Moreover, it could be contrary to the interests of target date investors, who can have a long time horizon, and the fiduciary interests of sponsors.

In Mullen’s view, the effectiveness of a target-date strategy can only accurately be gauged over a full market cycle--through both a bull and bear market.

That cycle typically takes a lot longer than three years, notes Mullen.

On the matter of fees, cheaper does not always mean better, particularly when it comes to TDFs, thinks Mullen.

“While minimizing costs for participants is certainly important, portfolio construction and active risk management may have a greater impact on improving long-term results,” he wrote.

A look at MFS’s Lifetime 2015 fund clearly shows that active in not synonymous with aggressive.

As of the end of January, the fund held a 71 percent allocation in fixed income, with 25 percent in equities, most of that in U.S stocks.

Compare that to Vanguard’s Target Retirement 2015 Fund, which holds about 49 percent of assets in indexed equity funds.

Vanguard’s 2015 fund is passively managed, and holds a total of five underlying indexed funds, all pulled from the Vanguard family.

MFS’s 2015 has 21 proprietary funds under the hood.

Mullen argues that portfolio construction must be a fiduciary consideration when assessing one fund over another, particularly in volatile markets, and particularly as glide paths near retirement age.

He notes the performance of 2010 target-date funds during the financial crisis. Conservatively managed funds with a “to retirement” strategy suffered losses on average of 19.7 percent, while more aggressive strategies with a “through retirement” allocation suffered losses of more than 27 percent.

No TDF is purely passively managed, says Mullen, making it more incumbent on sponsors to make sure they’re taking a thorough look under the hood along with noting a fund’s price tag.

“Active managers take a holistic approach to managing risk at both the security and portfolio levels,” wrote Mullen.

“With risk management embedded in their investment process and a long-term focus, those managing active target-date funds look past short-term market movements and aim to mitigate volatility by focusing on fundamentals and selecting investments that can potentially hold their value through changing markets,” he added.

And that’s something fiduciaries need to consider along with fees and short-term performance, lest they “miss the forest through the trees” by defaulting participants into the wrong target date strategy, says Mullen.