Class on Asset Classes

Almost all 401(k) plans have the basic asset classes covered, but the degree to which they vary with regard to basic asset class investment options as well as their inclusion of additional classes, can be notable. Target Date Funds (TDFs) are investment vehicles that, too, use asset classes. Finding out which ones can require a little digging, though, as you'll most likely need to reference a TDF's factsheet or issuer's website.


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CITs: The ‘other’ TDF vehicle

Mutual funds have been the preferred vehicle for Target Date Funds since TDFs' infancy. Because Target Date Funds employ a fund-of-funds structure, it made sense for TDFs to be offered in a mutual fund vehicle as well. However, the TDF market is transitioning to Collective Investment Trusts (CITs) as a preferred vehicle.


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Target Date Fund Basics

Target Date Funds (TDFs) are designed to reduce equity exposure as the target date approaches, becoming more conservative as participants age.


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