Premium
Target Risk Funds
Author(s) -
Elton Edwin J.,
Gruber Martin J.,
de Souza Andre
Publication year - 2016
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12098
Subject(s) - global assets under management , institutional investor , business , stable value fund , fund of funds , passive management , closed end fund , asset allocation , control (management) , finance , open end fund , asset (computer security) , commodity pool , investment (military) , actuarial science , economics , market liquidity , portfolio , corporate governance , computer science , computer security , management , politics , law , political science
There is a vast literature which shows that investors don't make rational decisions in allocating resources among different investments. Target risk funds and target date funds are two types of mutual funds primarily organised as fund of funds that make the asset allocation decision for an investor. Both are used as options in 401(k) plans and Individual Retirement Accounts. However they control for risk in very different ways. Target risk funds have not been studied. This article is the first comprehensive study of their characteristics and performance and how they compare to target date funds as an investment.