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Target date funds have 'quantitatively large effects' on stock prices


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Target date funds are a staple in many workplace retirement plans. Often used as a default investment option, TDFs optimize risk when an individual is young and gradually adjust to a more conservative investment mix as retirement nears, effectively relieving investors of having to actively rebalance their portfolios between stocks and bonds.
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The option has proved popular: The total amount of assets invested in TDFs increased to $1.4 trillion at the end of 2019 from around $8 billion dollars in 2000. There has been a similar rise in target date collective investment trusts (which some firms provide instead of TDFs for their employees) so that the total funds in target-date type funds is now well over $2 trillion. ....

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