The Markets
Schwab Finds Target-Date Funds Performed Well
In examining the performance of its suite of target-date funds during
the previous two years, Schwab found many funds outperformed the
overall market and recovered nearly all losses.
Reported by Rebecca Moore
A Schwab announcement said a dollar-cost-averaging investor closest to retirement (2010 fund) would have recovered nearly all principal (97%) as of December 2009. According to the analysis, even those furthest from retirement (2050 fund) would have recovered 87% of principal as of December 2009.
Schwab also found a dollar-cost-averaging investor would have nearly 15% more total value at the end of 2009 than if they invested in the S&P 500 compared to investors that stopped regularly contributing to their plans at the first dips in the market in January of 2008. In addition, individuals who remained invested in the Schwab funds and continued contributing from January 2008 to December 2009 did better than those that sold their funds at the end of the tumultuous 2008 year.
Schwab said it saw similar results in both target funds for 401(k) plans and retail funds.