Vanguard's approach to target-date funds

May 30, 2018 (Originally published May 13, 2015)

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The use of target-date funds (TDFs) continues to grow among participants saving for retirement—and for good reason. TDFs can help investors construct well-diversified portfolios while simplifying the investment process.

This updated research paper, Vanguard's approach to target-date funds, outlines the theoretical foundation for life-cycle investing. Authors Scott Donaldson, Fran Kinniry, Andrew Patterson, Vytautas Maciulis, and Michael DiJoseph detail Vanguard's perspective on glide path construction, asset class diversification, and the potential benefits of an all-indexed investment approach.

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  • All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
  • Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a target-date fund is not guaranteed at any time, including on or after the target date.