Yahoo Finance Target Date Funds: Top 3 for Each Retirement Period
Reporting by Christina Lavingia, GRAPHIQ.
With Social Security a campaign buzz word, it makes sense that retirement is a concern for both those approaching that age, as well as those who are decades away.
There are numerous methods to save for retirement: 401ks, IRAs, pensions, mutual funds and traditional savings accounts. A lesser-know option, target-date mutual funds (TDFs) have become increasingly popular, growing from $6 billion to $245 billion between 2000 to 2010 according to a study by the Wharton School.
This unique type of mutual fund, commonly used by young investors, offers automatic rebalancing over the years leading up to retirement, decreasing portfolio risk over time with more conservative investments in bonds, treasury securities and cash equivalents.
With so many options to choose from, it's understandable why many investors can struggle to make the best decisions for their retirement savings. TDFs typically start out heavily weighted on equities when an investor has decades until his planned retirement. These funds are managed by the company fund managers over time to align with investors' risk tolerance and time left until expected retirement.
This one-size-fits-all option isn't necessarily right for everyone, though. No one's retirement savings or personal circumstances are identical to another's. One major criticism of this approach is that it's primarily based on past performance, which is not always a good indicator of future performance. In addition, bond funds are expected to underperform in a rising rate environment.
As investors in TDFs approach retirement, their asset allocation will be heavily weighted toward bonds and other fixed-income securities, which may perform poorly compared to an investment in a Vanguard Total Stock Market Index fund. Those investors who want a more aggressive investment allocation can select a later target date fund (for example, one for 2035 rather than 2030) to be part of that fund with increased risk and potentially higher returns.
Digging deeper into TDF performance, the Credio team analyzed all target date funds, and narrowed down the list to the top three TDFs for each retirement period (from 2016 through 2055) with the following criteria:
Funds must be unleveraged and currently open to new investors.
Fund share classes must be open to individual investors.
Funds must have a lower-than-average expense ratio by 0.25% compared to peer funds in that target-date category.
Funds must have an above-average five-year, load-adjusted return rate.
#24. VTWNX - Vanguard Target Retirement 2020 Inv
Five-Year Annualized Return: 8.00% (vs. 5.93% peer average)
Expense Ratio: 0.16% (vs. 1.01% peer average)
Yield: 1.88%
Net Assets: $27.5 Billion
Investment Style: Target Date 2016-2020
#23. TRRBX - T. Rowe Price Retirement 2020
Five-Year Annualized Return: 8.49% (vs. 5.93% peer average)
Expense Ratio: 0.66% (vs. 1.01% peer average)
Yield: 1.68%
Net Assets: $25.2 Billion
Investment Style: Target Date 2016-2020
#22. RRCTX - American Funds 2020 Target Date Retirement
Five-Year Annualized Return: 8.60% (vs. 5.93% peer average)
Expense Ratio: 0.38% (vs. 1.01% peer average)
Yield: 1.52%
Net Assets: $5.98 Billion
Investment Style: Target Date 2016-2020
#21. SWHRX - Schwab Target 2025
Five-Year Annualized Return: 8.85% (vs. 7.25% peer average)
Expense Ratio: 0.67% (vs. 0.96% peer average)
Yield: 2.20%
Net Assets: $409 Million
Investment Style: Target Date 2021-2025
#20. TRRHX - T. Rowe Price Retirement 2025
Five-Year Annualized Return: 9.17% (vs. 7.25% peer average)
Expense Ratio: 0.69% (vs. 0.96% peer average)
Yield: 1.54%
Net Assets: $18.4 Billion
Investment Style: Target Date 2021-2025
#19. RFDTX - American Funds 2025 Target Date Retirement
Five-Year Annualized Return: 9.74% (vs. 7.25% peer average)
Expense Ratio: 0.40% (vs. 0.96% peer average)
Yield: 1.41%
Net Assets: $5.84 Billion
Investment Style: Target Date 2021-2025
#18. SWDRX - Schwab Target 2030
Five-Year Annualized Return: 9.42% (vs. 7.18% peer average)
Expense Ratio: 0.72% (vs. 1.05% peer average)
Yield: 2.28%
Net Assets: $790 Million
Investment Style: Target Date 2026-2030
#17. TRRCX - T. Rowe Price Retirement 2030
Five-Year Annualized Return: 9.78% (vs. 7.18% peer average)
Expense Ratio: 0.72% (vs. 1.05% peer average)
Yield: 1.46%
Net Assets: $24.6 Billion
Investment Style: Target Date 2026-2030
#16. RFETX - American Funds 2030 Target Date Retirement
Five-Year Annualized Return: 10.27% (vs. 7.18% peer average)
Expense Ratio: 0.42% (vs. 1.05% peer average)
Yield: 1.28%
Net Assets: $5.96 Billion
Investment Style: Target Date 2026-2030
#15. SWIRX - Schwab Target 2035
Five-Year Annualized Return: 10.03% (vs. 8.22% peer average)
Expense Ratio: 0.75% (vs. 0.99% peer average)
Yield: 2.29%
Net Assets: $336 Million
Investment Style: Target Date 2031-2035
#14. TRRJX - T. Rowe Price Retirement 2035
Five-Year Annualized Return: 10.19% (vs. 8.22% peer average)
Expense Ratio: 0.74% (vs. 0.99% peer average)
Yield: 1.38%
Net Assets: $13.4 Billion
Investment Style: Target Date 2031-2035
#13. RFFTX - American Funds 2035 Target Date Retirement
Five-Year Annualized Return: 10.30% (vs. 8.22% peer average)
Expense Ratio: 0.43% (vs. 0.99% peer average)
Yield: 1.31%
Net Assets: $4.21 Billion
Investment Style: Target Date 2031-2035
#12. TRRDX - T. Rowe Price Retirement 2040
Five-Year Annualized Return: 10.41% (vs. 7.85% peer average)
Expense Ratio: 0.75% (vs. 1.06% peer average)
Yield: 1.28%
Net Assets: $17 Billion
Investment Style: Target Date 2036-2040
#11. RFGTX - American Funds 2040 Target Date Retirement
Five-Year Annualized Return: 10.43% (vs. 7.85% peer average)
Expense Ratio: 0.43% (vs. 1.06% peer average)
Yield: 1.20%
Net Assets: $3.78 Billion
Investment Style: Target Date 2036-2040
#10. SWERX - Schwab Target 2040
Five-Year Annualized Return: 10.45% (vs. 7.85% peer average)
Expense Ratio: 0.78% (vs. 1.06% peer average)
Yield: 2.34%
Net Assets: $835 Million
Investment Style: Target Date 2036-2040
#9. TLMPX - TIAA-CREF Lifecycle Index 2045 Premier
Five-Year Annualized Return: 10.07% (vs. 8.59% peer average)
Expense Ratio: 0.27% (vs. 1.01% peer average)
Yield: 2.05%
Net Assets: $372 Million
Investment Style: Target Date 2041-2045
#8. TRRKX - T. Rowe Price Retirement 2045
Five-Year Annualized Return: 10.43% (vs. 8.59% peer average)
Expense Ratio: 0.75% (vs. 1.01% peer average)
Yield: 1.32%
Net Assets: $7.83 Billion
Investment Style: Target Date 2041-2045
#7. RFHTX - American Funds 2045 Target Date Retirement
Five-Year Annualized Return: 10.46% (vs. 8.59% peer average)
Expense Ratio: 0.43% (vs. 1.01% peer average)
Yield: 1.18%
Net Assets: $2.32 Billion
Investment Style: Target Date 2041-2045
#6. TLLPX - TIAA-CREF Lifecycle Index 2050 Premier
Five-Year Annualized Return: 10.07% (vs. 8.01% peer average)
Expense Ratio: 0.27% (vs. 1.10% peer average)
Yield: 2.04%
Net Assets: $249 Million
Investment Style: Target Date 2046-2050
#5. RFITX - American Funds 2050 Target Date Retirement
Five-Year Annualized Return: 10.44% (vs. 8.01% peer average)
Expense Ratio: 0.44% (vs. 1.10% peer average)
Yield: 1.14%
Net Assets: $1.91 Billion
Investment Style: Target Date 2046-2050
#4. TRRMX - T. Rowe Price Retirement 2050
Five-Year Annualized Return: 10.45% (vs. 8.01% peer average)
Expense Ratio: 0.75% (vs. 1.10% peer average)
Yield: 1.22%
Net Assets: $6.02 Billion
Investment Style: Target Date 2046-2050
#3. VFFVX - Vanguard Target Retirement 2055 Inv
Five-Year Annualized Return: 9.87% (vs. 8.92% peer average)
Expense Ratio: 0.18% (vs. 1.09% peer average)
Yield: 1.73%
Net Assets: $2.46 Billion
Investment Style: Target Date 2051+
#2. RFKTX - American Funds 2055 Target Date Retirement
Five-Year Annualized Return: 10.43% (vs. 8.92% peer average)
Expense Ratio: 0.47% (vs. 1.09% peer average)
Yield: 1.05%
Net Assets: $718 Million
Investment Style: Target Date 2051+
#1. TRRNX - T. Rowe Price Retirement 2055
Five-Year Annualized Return: 10.45% (vs. 8.92% peer average)
Expense Ratio: 0.75% (vs. 1.09% peer average)
Yield: 1.23%
Net Assets: $2.04 Billion
Investment Style: Target Date 2051+
