SUMMARY
- The S&P Target Date® Scorecard provides performance comparisons and analytics covering the target date fund (TDF) universe.
- The S&P Target Date Index Series offers representative benchmarks for TDFs. The series is investable, comprises consensus-derived asset allocation weights, and its composition is known in advance of evaluation periods.
- S&P Dow Jones Indices also produces S&P Target Date Style Indices. The “To” style indices aim to reduce the impact of market drawdowns around the expected retirement date, while the “Through” style indices aim to mitigate longevity risk—the risk of outliving one’s assets in retirement.
- 2021 was a positive year for U.S. equities, and the S&P 500® (up 29%) outperformed the S&P MidCap 400® (up 25%) and S&P Small Cap 600® (up 27%) for the fifth consecutive year. After renewed optimism over the U.S. economic outlook provided tailwinds for smaller, more domestically focused companies, large caps proved more resilient to inflation worries and virus variant concerns.
- Unsurprisingly, S&P Target Date Indices with higher equity allocations outperformed: far-dated vintages posted higher returns than their nearer-dated counterparts, and “Through” style indices outperformed their “To” style counterparts.
- As has been typical in our reports, near-dated S&P Target Date Indices had higher risk-adjusted performance than their far-dated counterparts. The risk reduction from allocating more heavily to fixed income more than compensated for lower performance
- Similarly, near-dated “To” style indices posted higher risk-adjusted performance than their “Through” style counterparts, especially over three- and five-year horizons. But far-dated “Through” style indices’ higher performance more than compensated for higher volatility, especially over the 10-year horizon.
- TDFs with more assets typically outperformed their smaller counterparts; asset-weighted returns were higher than equal-weighted returns for most vintages over one-, three- and five-year periods. However, longer-dated TDFs with fewer assets outperformed in 2021.
