We rank Target Date Funds (TDFs) by comparing each TDF to a cloned version of itself. TDFs are composed of mutual funds and they report their holdings quarterly. We clone TDFs by substituting the actual mutual fund holdings with low cost, passive index funds. We compare actual TDF returns to cloned benchmark returns. To measure performance, we calculate:

Overall TDF Performance: The annualized difference in percentage returns of the TDF relative to its cloned benchmark. Negative values represent underperformance.

Trading Performance: The annualized performance difference between the TDF’s trading and rebalancing versus rebalancing the cloned benchmark. The benchmark is updated quarterly but does not actively adjust positions within quarters. Negative values represent underperformance.

Fees Performance: The annualized fee difference between the TDF and the low costs, passive index funds in the cloned TDF. TDFs’ total fees are often higher than the stated fee because fees are often also assessed on the mutual funds the TDFs hold. Negative values represent higher fees for the TDF.

TDF Performance Since: The difference in the amount of money that an investor would have (for every $100,000 invested) by using the actual TDF instead of the cloned benchmark. Negative values represent underperformance.

30-Year Shortfall Risk: The projected loss or gain from incurring the annual Overall TDF Performance for 30 years, assuming a 0% return on investments. This value reflects the potential cost of using poorly performing TDFs.