Report : Investment | February 22, 2021

A systematic framework for validating TDF glide paths

The last two decades have solidified the important role target-date funds (TDFs) play in improving retirement outcomes for investors. As these funds continue to grow and become even more widely available, a systematic, empirical approach to validating their glide paths is vital.

Vanguard's Strategic Asset Allocation Committee has approved a novel framework for consistently assessing glide-path changes across Vanguard's U.S. TDF suite. The framework takes into consideration many qualitative and quantitative metrics. Two considerations particularly relevant to TDF investors are the "certainty fee equivalents"—essentially an estimated annual risk-adjusted return differential between the current and alternative glide paths—and the probability of success. Together, these factors provide relative and client-centric benchmarks.

The committee's memo, A Systematic Framework for Validating TDF Glide Paths, summarizes its recent discussions about TDF glide paths based on work done by Vanguard Investment Strategy Group.


  • All investing is subject to risk, including the possible loss of the money you invest.
  • 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 work force. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date.