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The Case for Alternative Investments in Target Date Funds


1
Introduction
The creation of the target date fund (TDF) sought to make available a professionally managed solution for individuals saving for retirement through their employer’s defined contribution (DC)/ 401(k) plan. In the U.S., DC assets represent 61% of total retirement assets
1 and that percentage is expected to continue to rise. However, despite improvements to investment options and participant behavior, on average, DC plans continue to see returns that lag defined benefit (DB) plans. Looking across two recent studies, this deficit is clear: 
Corporate DB plans outperformed DC plans by an average of 70 bps, net of fees, per year between 1990 and 2012. ....

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