Commentary

Is your "index" target date fund performing like its index?

Key considerations for establishing an index target date fund's composite benchmark and for managing the index TDF portfolio.

By: Andrew Dierdorf Finola McGuire Foley Brett Sumsion

Updated: 11/15/2022

Key Takeaways

Investors in an index target date fund (TDF) should expect performance that closely tracks a composite benchmark representing the fund’s strategic asset allocation.
Our review of realized performance among several prominent index TDFs shows that some managers have delivered on this expectation more effectively than others.
In our view, managers have realized disparate outcomes primarily because of differences in implementation processes, capabilities, and skill.
The implementation process for a TDF includes two key components that require investment insights and skill: (1) establishing a composite benchmark and (2) management of the portfolio.

Get the full white paper

Is your "index" target date fund performing like its index?

Next steps to consider

Investments & portfolio construction

Manage client portfolios with greater efficiency and impact with our broad universe of portfolio construction solutions and investment products.

Learn more

Fidelity Portfolio Quick Check

Analyze, compare, and optimize your investment strategy in minutes with our free on-demand digital portfolio analysis tool.

Learn more

For important information, see the full linked content.

1136634.1

1535D202C5CF447EA2B1A02A5D487C3C

Past performance is no guarantee of future results.

Unless otherwise expressly disclosed to you in writing, the information provided in this material is for educational purposes only. Any viewpoints expressed by Fidelity are not intended to be used as a primary basis for your investment decisions and are based on facts and circumstances at the point in time they are made and are not particular to you. Accordingly, nothing in this material constitutes impartial investment advice or advice in a fiduciary capacity, as defined or under the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code of 1986, both as amended. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in the products or services and may receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services. Before making any investment decisions, you should take into account all of the particular facts and circumstances of your or your client’s individual situation and reach out to an investment professional, if applicable.

The use of the term "advisor(s)" throughout this site shall refer to both investment advisors and broker-dealers as a collective term.