New Firm to Evaluate Target-Date Funds

Two consultants and a university professor have formed a company to help advisers and plan sponsors better evaluate target-date/lifecycle fund offerings.

Involved in Target Date Analytics (TDA) are Ronald J. Surz, president of PPCA Inc.; Joe Nagengast, President, Turnstone Advisory Group LLC; and Craig Israelsen, a Brigham Young University professor.

According to a news release, TDA executives believe that target-date funds should protect retirement savings against loss and grow the assets as much as possible without jeopardizing that pool of money.

The company will apply its standards for achieving these goals and evaluate the target-date industry through aggregates of industry practices. TDA will focus on both registered mutual funds and collective trust vehicles.

The announcement said TDA has gathered extensive monthly total return data from January 1, 1998 through September 30, 2007 and is creating indexes that benchmark accumulation funds. Currently, TDA is providing 15 indexes: three types of indexes for each of five target dates (2010, 2020, 2030, 2040, and 2050). Additional target dates will be added over time. The company said it does not intend to provide benchmarks for distribution funds.

Each fund is being assigned into Conservative, Moderate, or Aggressive categories, using correlations to TDA indexes as the determinant, the company said.

TDA will provide alpha, beta, and R-squared data for all target-date mutual funds and collective trusts.

More information about TDA is available here.