Assessing the effectiveness of lifecycle (target-date) funds during the accumulation phase
DOI:
https://doi.org/10.61190/fsr.v20i4.4714Keywords:
Lifecycle funds, Target-date funds, Bootstrap, Asset allocation, RetirementAbstract
Using bootstrap simulations, asset allocations that mimic real-world lifecycle fund behavior are shown to have lower accumulation efficiency than several available alternatives. The alternatives include fixed stock/bond allocation with 80% or more in stocks and a set of adaptive strategies that attempt to protect gains against catastrophic loss. It seems that during the accumulation phase, lifecycle funds are not as safe, reliable, or effective as implied.
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