Which Target-Date Funds Are the Most Aggressive?

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Bull leading the pack

Target-Date Funds

Which Target-Date Funds Are the Most Aggressive?

Aaron Levitt Sep 30, 2015


However, there are some target-date funds that are more aggressive than others. This means that they hold a higher percentage of stocks throughout their life cycle.

The basic idea is that a heftier dose of stock allocation is needed to help investors gain enough returns to last through longer and longer retirements. We’re living longer lives and that means that our retirement periods are getting longer, too. With retirements lasting 30 years or more in some cases, you’ll need to generate strong returns even after you’ve stopped punching the clock.

But which fund families offer the most aggressive target-date funds? Here are five that carry a hefty dose of stocks throughout their life cycles.


1. T. Rowe Price


T. Rowe’s suite of target-date funds are also heavy in their allocation of foreign and actively managed mutual funds. The bond side is also more aggressive as it is peppered with holdings of preferred stocks, convertibles, high-yield and foreign bonds. At the end of the day, T. Rowe’s TDFs are perfect for someone facing longevity risk.


2. American Funds


For investors looking to head off longevity risk without some of the volatility associated with “growth” investing, American Funds’ suite of target-date funds could be a good bet.


3. Putnam Funds


For investors, Putnam’s funds could be a unique way to provide growth throughout retirement, even though they are technically “to” funds. The focus on alts and nontraditional fixed-income asset classes will still provide needed growth, albeit at a lower rate.


4. Schwab Funds


At retirement, Schwab’s glide path will only have 40% of its portfolio in equities. This figure is still pretty high, but not too high. In addition, Schwab’s suite of funds is designed to provide growth for only 20 years after retirement, not 30. After those 20 years, Schwab’s funds will only hold 25% of its assets in equity, while 66% will be in fixed-income funds and 9% will be in cash and cash equivalents.

Schwab’s suite ultimately make sense for investors looking to keep their retirement portfolios humming throughout their golden years without taking too much risk.


5. John Hancock Funds


This is the main idea when looking at longevity and inflation risks. At retirement, John Hancock’s funds will have 50% of their portfolios in stocks. That number is reduced to 25% around 20 years after retirement.

For investors, Hancock’s target-date funds could be a great fit if they are looking to “play the field” and select the best managers for each assets class but don’t have the time or know-how.


The Bottom Line


Disclosure: None



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