Target Date Fund Benchmarks

Jun. 13, 2018 1:58 PM ET
Ronald Surz profile picture
Ronald Surz


  • SMART originated in 2007, S&P in 2008 and Morningstar in 2009.
  • The Big 3 have also become industry standards.
  • Choose your TDF to match your objectives, & your benchmark as well.

At $2 trillion and growing, target date funds have become the most important investment in 401(k) plans, yet these funds are still in their infancy, having effectively launched with the Pension Protection Act of 2006. Importantly there is not yet a standard benchmark for evaluating TDF performance. Nevertheless, fiduciaries must monitor and evaluate their TDF selection.

This article describes current benchmark choices and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated.

The most important aspect of TDF benchmarks is their “glide path” that maps the sequence of asset allocations through time, moving from high risk to low. Asset allocation is the primary determinant of investment performance.

We begin with descriptions of the primary indexes that are available. The predecessor to the SMART Indexes was launched in 2007, followed by the S&P Indexes in 2008, and then Morningstar in 2009.


Fiduciaries can select from these three indexes as their TDF benchmark:

  • Morningstar Lifetime Allocation Indexes are normative, modeled to maintain constant combined risk of human and financial capital
  • S&P Target Indexes are consensus indexes, calculated by aggregating most TDF mutual funds on Morningstar
  • SMART Target Date Fund Indexes are also normative, modeled to preserve savings through to the target date.

Their glide paths are as follows:

The Morningstar Indexes are about 10% more in equities than the S&P indexes. The SMART Indexes are similar to the S&P until they reach the “Risk Zone” that spans the 5-10 years before and after retirement, at which time SMART becomes more defensive. Losses in the Risk Zone can be devastating because account balances are at their highest and our working lives are ending. “Equities” encompass

This article was written by

Ronald Surz profile picture
I'm president of  Target Date Solutions, developer of the patented Safe Landing Glide Path , Soteria personalized target date accounts, and Age Sage do-it-yourself investing. I;m also co-host of the Baby Boomer Investing Show.   My passion is helping his fellow baby boomers at this critical time in their lives when they are relying on their lifetime savings to support a retirement with dignity, so he wrote a book Baby Boomer Investing in the Perilous 2020s and he provides a financial educational curriculum I'm author of 3 books: Baby Boomer investing in the Perilous Decade of the 2020s, & 2 books on target date funds I’m smart with 2 Masters degrees and 55 years in financial consulting. I’m semi-retired, and prefer helping my fellow baby boomers rather than playing golf. I’m worried that our country, & most others, is playing with fire in its money printing. I’m here to help – that’s my legacy space.I help investors deal with life’s investment challenges, with the objective of enjoying a comfortable long retirement. I’m passionate about questioning and improving upon entrenched stale practices like jamming everyone into cookie cutter model portfolios. That's why I produce the Baby Boomer Investing Show live on Youtube and Facebook every other Tuesday at 10:00 PST. Watch live or replay by searching for "Age Sage Robo" on Facebook or Youtube. Please watch and support our Boomer Investing Show on Patreon ( ) and visit our SA Blog at . As president of Age Sage Robo (please Google), and CEO of GlidePath Wealth Management, I’m responsible for model development using my patented process . I have more than 50 years of financial service experience and hold a U.S. Patent for a time-tested glide path investment process that helps investors navigate the complicated financial decisions they face as they accumulate and preserve assets for their retirement years. Age Sage & GlidePath use this process to build Target Date, Special Purpose, and Life Span Portfolios that are tailored to the specific requirements of clients. My extensive financial career began at A.G. Becker Pension Consultants where I advised on the investment policies of several trillion dollars of retirement plan assets. After Becker I started my own consulting firms that developed innovative services for investors and the financial advisors who serve them. I’ve earned a BS and MS in Applied Mathematics from the University of Illinois and an MBA in Finance from the University of Chicago. I am author of the book "The Remarkable Metamorphosis of Target Date Funds" and co-author of "The Fiduciary Handbook for Understanding and Selecting Target Date Funds"Please visit

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am a sub-advisor of the SMART TDF Index and the originator of the 1st and only Robo Analyst that integrates Age with Risk. Please visit my Blog at

Age Sage builds better asset allocation models that help Baby Boomers transition through the Risk Zone that spans the 5-10 years before and after retirement. Implementation of these models can be done for less than 6 basis points. Boomers are poised for a sucker punch that they’ll never shake off.

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