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Detecting Target-Date Series' Biases

A close inspection of sub-asset-class glide paths reveals notable divergences between target-date series.

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Morningstar recently released its annual study of target-date funds. The Process section highlighted here delved into how examining target-date series' sub-asset-class glide paths helps investors understand target-date managers' varying investment approaches.

Digging Deeper Than the Equity Glide Path
Target-date funds' equity glide paths map the predetermined asset-allocation course that investment managers plan to use over the course of investors' working years and beyond. They're useful in making broad comparisons between different target-date series, but they also only scratch the surface in identifying differences in target-date managers' approaches. In addition to the overall equity exposure, target-date managers also make decisions--some of which appear to be more deliberate than others--for multiple subasset classes.

Jeff Holt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.