Adding "value" to sustainable post-retirement portfolios
DOI:
https://doi.org/10.61190/fsr.v21i1.3875Keywords:
Retirement portfolios, Asset allocation, Target-date funds, BootstrapAbstract
Balanced mutual funds, long used in individual retirement plans, have increased in popularity in recent years, partly because they are one of three qualified default investment alternatives in employer sponsored retirement plans. Using mean-reverting valuation metrics, we design semi-passive balanced fund portfolios with significantly lower shortfall rates and higher remaining balances than those found in studies like Bengen (l 994) and Spitzer and Singh (2008). The results from our study, using rolling periods and bootstrapping simulation methods, indicate that our valuation-based portfolios unambiguously outperform both conventional balanced funds and target-date funds, and that they should be included as additional offerings in retirement plans.
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