Real Facts about Target Date Funds: An ICI Rebuttal

At the beginning of 2010 the Investment Company Institute (ICI) released an article titled “Dispelling Target Retirement Date Fund Myths with the Facts.” This article appeared on the ICI website and was sent out widely across the industry. The article contained a list of six “myths” about target date funds that the ICI attributed to those calling for  improvements to the target date fund market.  As a counter-argument the ICI put forth a set of 6 “facts”, that purported to refute the set of 6 myths. In so doing, the ICI misrepresented many of the basic facts about target date funds and painted an overly rosy picture of the target date fund marketplace. The white paper that is attached to this blog post is our attempt to set the record straight. We wrote this white paper in consultation with independent fiduciary Matthew Hutcheson and with critical feedback and insights from Joe Nagengast and Craig Israelsen of Target Date Analytics.

Click Here to download Real Facts about Target Date Funds

Notes: It is important to note that the authors are generally supportive of the growth of target date funds. It is our belief that they hold great promise for the generation of American workers who will be dependent upon defined contributions plans for their retirement income security. But, if these instruments are to be the “number one savings vehicle in America” we think they should be held to a very high standard of quality. Like any new investment instrument they are not without their flaws, but it is up to market participants and the regulators to ensure that the funds, their regulation, and their disclosure are aligned in the best interests of American workers. BrightScope’s general views in the white paper are not shared unanimously by Target Date Analytics and Matthew Hutcheson.

To download a copy of the white paper either click the image above or follow this link: BrightScope Real Facts about Target Date Funds