2010 Funds Have Rough Quarter

It’s been a rough month for the markets, and a challenging quarter for 401(k) plan investments.

Consequently, it seems likely that a growing number of 401(k) plan participants—as well as plan sponsors and their advisers—will be curious to know how the target-date fund offerings on their menus have fared.

Varied Allocations

Asset allocations in these target-date funds vary widely, of course, mirroring variances in the glide path philosophies that underpin them (see “Invest-O-Matic,’ “FAAF: Glide Paths – Getting From Here to There’)—and those variances are most evident in the target-date fund closest to the target date. That’s also the place/time when workers are potentially most vulnerable to the fluctuations in the market, of course.

According to Target Date Analytics (TDA), the “raw” average year-to-date performance of the four largest 2010 funds (the ones for folks closest to retirement) at September 30: -13.73%.

The following are returns provided by TDA based on Morningstar data. The four funds listed hold about 90% of all the assets invested in 2010 funds, according to TDA. Their performance for the periods indicated is presented alongside the PLANSPONSOR On-Target Defensive Index (OTI), one of four new benchmarks for target-date funds released by PLANSPONSOR.

Fund & ticker4 wks3 monthsYTD12 months 3 yr
Fidelity 2010 (FFFCX) -6.92% -8.62% -12.95% -13.60% 1.46%
T. Rowe 2010 (TRRAX) -7.56% -8.11% -14.00% -14.93% 1.95%
Vanguard 2010 (VTENX) -6.06% -6.32% -11.23% -11.30% N/A
Principal 2010 (PTTIX) -8.23% -10.38% -16.72% -18.68% -0.65%
PLANSPONSOR OTI 2010 -2.90% -3.12% -0.81% 1.69% 5.14%

More information about the PLANSPONSOR On-Target Indexes is available at http://www.tdbench.com/IndexData.html