# Are target date funds dinosaurs? Failure to adapt can lead to extinction

## TL;DR

This paper questions the effectiveness of traditional Target Date Funds, showing that adaptive investment strategies outperform them, implying many such funds may be outdated and not serving investors well.

## Contribution

The study introduces a model demonstrating that adaptive strategies outperform standard Target Date Funds, challenging their widespread use and effectiveness.

## Key findings

- Adaptive strategies outperform traditional Target Date Funds
- Most Target Date Funds may be serving investors poorly
- Model based on historical returns supports these conclusions

## Abstract

Investors in Target Date Funds are automatically switched from high risk to low risk assets as their retirements approach. Such funds have become very popular, but our analysis brings into question the rationale for them. Based on both a model with parameters fitted to historical returns and on bootstrap resampling, we find that adaptive investment strategies significantly outperform typical Target Date Fund strategies. This suggests that the vast majority of Target Date Funds are serving investors poorly.