Surprisingly, target funds seem to be doing their jobs well enough, despite their ‘one-size-fits-all’ style.
There are many target date mutual funds that have appeared in the past 5-10 years, which are supposed to simplify your investment decisions. These target funds are nothing more than carefully selected asset allocations, based on historical models and a client’s time horizon.
For example, Target Retirement 2018 will probably consist of 70% Fixed Income Funds, and 30% of Equity Funds, and Target Retirement 2028 will probably consist of 50% Fixed Income Funds and 50% Equity Funds, etc.
However, it is the underlying performance of equity markets which would determine whether your Target Mutual Funds will miss or reach their goals.
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