Target date fund investors on track for retirement

A new ING U.S. study suggests that nearly three-quarters of workplace retirement plan investors who use target date funds feel more secure about their long-term financial future.

The study, commissioned by ING's Retirement Research Institute and its Investment Management divisions, was created to track investors' attitudes, interest and confidence in the TDF market.

Target date fund assets have grown enormously over the past decade, from $15 billion in 2002 to $363 billion in 2011, according to Morningstar.

The study also found that 93 percent of target date investors look for a fund that provides stronger protection against market losses in the years up to and including retirement; some 88 percent of target date investors expressed interest in a fund that would offer guaranteed income at retirement. Eighty percent of respondents using the funds already say they would prefer less market risk as they approach retirement.

Investors also indicated they had a better understanding of the issues involved in retirement; 86 percent of those with TDF investments felt confident they understood the definition of "diversification," versus 71 percent outside of the market, and 61 percent with TDFs prefered multi-manager strategies.

“These findings suggest that diversified, age-adjusted target date funds, when effectively designed, may work better than traditional offerings in bridging the gap between investor knowledge and long-term retirement objectives,” said Paul Zemsky, CIO of Multi-Asset Strategies for ING Investment Management, in a release.



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