Target-date funds, designed to be an all-in-one portfolio for retirement investors, have had a mixed record during the recent wild swings of the market.
In general, target-date fund families with larger allocations in fixed income investments compared to their peers fared better than those more focused on stocks recently, said Jeff Holt, a fund analyst at investment research firm Morningstar. But target-date funds with larger stock allocations have outperformed their peers overall during the six-year bull market.
For example, take two target-date funds designed for investors who retire this year: The Fidelity Freedom 2015 fund, which has more than 43 percent of its holdings in bonds and cash, lost 2.5 percent for the month through Aug. 27. While the Wells Fargo Advantage Dow Jones Target 2015 fund, which has a nearly 71 percent stake in bonds and cash, only lost 0.87 percent over the same period. Yet the Fidelity fund has a five-year annualized return of 7.6 percent compared with the Wells Fargo fund's 4.4 percent return.