Investors now have nearly a dozen mutual fund TDFs to choose from. The growing number of lower-cost, all-index target-date funds, is the takeaway from the latest Popping the Hood
report from BrightScope
and Target Date Analytics
] — at least according to Ann Carrns of The New York Times
The launch of two new funds in 2011 — BlackRock Lifepath Index
and Lincoln Advisors Presidential Protected Profiles
— has brought the total number of all-index TDFs to 11, according to the report.
This has brought the overall expense ratio for TDFs down, Carrns writes. Index-fund TDFs often offer annual expenses of less than 20 basis points, like Vanguard and TIAA-CREF Lifecycle Index
at 18 bps, and Fidelity Freedom Index
at 19 bps. Compare that with 72 bps for the average institutional TDF, or an average expense ratio of 81 bps excluding index-only offerings.
The report also awarded letter grades to more than 40 fund series based on performance over the prior three years, risk, fees, strategy and the fund's parent company. Eight fund series received "A" grades, including Allianz Global
, American Century
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