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Fund Spy

How Strong Are Target-Date Series' Potential Building Blocks?

We examine target-date providers' menus of available underlying offerings.

Most target-date series invest in an array of their providers' proprietary strategies, so it's critical to consider each firm's range of expertise. One way to do that is to examine the broad categories in which firms' assets are most focused. Another is to measure the percentage of a firm's funds and exchange-traded funds in each category that are rated by Morningstar analysts where the cheapest share classes earn Morningstar Analyst Ratings of Bronze or better. The table below shows those percentages for the top target-date providers in the three types of strategies most likely to show up in target-date portfolios: diversified equity, taxable fixed income, and alternatives. Allocation funds are rarely included in target-date series; firms prefer using single-asset class strategies to more precisely target exposures.