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Target-date funds may only be step one in the evolution of retirement investing thanks to stricter regulation and technology breakthroughs.
By John Authers: TDFs help pension plans but face challenges of fees, asset allocation and benchmarks.
Source: Target-dated funds
After seven years of extraordinary stock market returns (S&P averaged 14.9 percent annualized from 2009 – 2015) valuations are now full and the profit cycle appears tired. Assuming a 7 percent annualized total return over the entire bull market that began with the start of the cycle in 2009 (see explanation “A”) the next decade could see 3 percent annualized returns on average. Put another way, over the next decade stock markets are likely to be more volatile and far less generous.