By: John Waggoner
Target-date funds are the Energizer Bunny of the mutual fund world. As the industry struggles furiously for investors’ money, target-date funds slide blithely by, with billions of dollars in new money flowing in. Now they’re adding a little extra juice: smart-beta strategies.
Some fund companies — most notably BlackRock Inc. — have begun to offer TDFs with smart beta (also called strategic beta), with the goal of improving returns. BlackRock’s LifePath Smart Beta fund suite ranges from 2020 to 2060 in five-year increments, and includes a fund for those in retirement. The difference: The funds for younger investors with a longer time horizon emphasize return-seeking factors, such as momentum, while the funds for