Best 2030-35 target-date funds of the decade post losses in 2020

How have the best-performing target-date funds of the decade fared amid recent coronavirus-driven volatility? For clients approaching retirement, one lesson in the space remains a constant: past performance is not indicative of the future returns.

The 20 top-performing target-date funds with target dates of 2030 and 2035, and at least $500 million in assets under management, posted an average 10-year gain of roughly 9%, Morningstar Direct data show. But so far this year, the 20 target-date funds posted a near 1.5% loss.

For comparison, index trackers like the SPDR S&P 500 ETF Trust (SPY) and the SPDR Dow Jones Industrial Average ETF Tracker (DIA) posted 10-year gains of 13.92% and 13.17%, respectively. The SPY and DIA have posted year-to-date losses of 0.31% and 4.31%, respectively.

“Looking at the performance differential, it's primarily made up of asset allocation differences,” says Marc Pfeffer, CIO of CLS Investments, adding that the target-date funds with the best 10-year returns have “less international and more growth, versus domestic and value, and those have been both in favor over the last decade, year in and year out. As I often tell people, asset allocation leaders — in terms of what works and what doesn’t work — changes.”

The leaders — from firms like Capital Group, T. Rowe Price and Vanguard — carried an average net expense ratio of 0.58%. That’s more than 20 basis points higher than the average expense ratio among target-date mutual funds in 2019, according to ICI’s latest fee report. It’s also 10 basis points higher than the broader industry’s average of 0.45%, according to Morningstar’s most recent annual fee survey.

For comparison, the Vanguard Target Retirement 2030 Investor (VTHRX) has a 14 basis point expense ratio, 10-year gain of 9.17% and YTD loss of 0.74%, data show.

“I think the expense ratio matters here, but you should also be more importantly looking at their investment styles,” Pfeffer says. “Every client's risk tolerance is different and every advisor should be customizing and knowing what that is — they have to explain the details.”

Scroll through to see the 20 target-date 2030-35 category funds with the best 10-year returns through June 10. Funds with less than $500 million in AUM and with investment minimums over $100,000 were excluded, as were leveraged and institutional funds. Assets and expense ratios, as well as year-to-date and one-, three-, five- and 10-year returns and net flows are listed for each. Flow data as of June 1. The data show each fund's primary share class. All data is from Morningstar Direct.

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Voya Solution 2035 Portfolio S (ISQSX)
YTD Net Flows (millions): ($8.66)
1-Yr. Net Flows (millions): ($30.40)
3-Yr. Net Flows (millions): ($119.48)
5-Yr. Net Flows (millions): ($220.84)
10-Yr. Net Flows (millions): ($429.22)
1-Yr. Return: 5.29%
3-Yr. Annualized Return: 5.59%
5-Yr. Annualized Return: 5.47%
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American Century One Choice 2035 Investor (ARYIX)
YTD Net Flows (millions): ($91.05)
1-Yr. Net Flows (millions): ($183.61)
3-Yr. Net Flows (millions): ($392.61)
5-Yr. Net Flows (millions): ($356.86)
10-Yr. Net Flows (millions): $25.78
1-Yr. Return: 7.29%
3-Yr. Annualized Return: 6.17%
5-Yr. Annualized Return: 5.64%
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Fidelity Advisor Freedom 2030 A (FAFEX)
YTD Net Flows (millions): ($66.12)
1-Yr. Net Flows (millions): ($164.85)
3-Yr. Net Flows (millions): ($477.83)
5-Yr. Net Flows (millions): ($902.39)
10-Yr. Net Flows (millions): ($923.78)
1-Yr. Return: 7.40%
3-Yr. Annualized Return: 6.60%
5-Yr. Annualized Return: 6.34%
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GuideStone Funds MyDestination 2035 Investor (GMHZX)
YTD Net Flows (millions): $13.61
1-Yr. Net Flows (millions): $21.08
3-Yr. Net Flows (millions): $133.30
5-Yr. Net Flows (millions): $121.37
10-Yr. Net Flows (millions): $331.07
1-Yr. Return: 7.03%
3-Yr. Annualized Return: 6.58%
5-Yr. Annualized Return: 5.76%
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JHancock Multi-Index 2035 Preservation 1 (JRYOX)
YTD Net Flows (millions): ($63.37)
1-Yr. Net Flows (millions): ($129.40)
3-Yr. Net Flows (millions): ($364.22)
5-Yr. Net Flows (millions): ($317.08)
10-Yr. Net Flows (millions): $535.47
1-Yr. Return: 9.04%
3-Yr. Annualized Return: 7.05%
5-Yr. Annualized Return: 6.60%
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Schwab Target 2030 (SWDRX)
YTD Net Flows (millions): ($60.56)
1-Yr. Net Flows (millions): ($78.63)
3-Yr. Net Flows (millions): ($99.80)
5-Yr. Net Flows (millions): ($67.08)
10-Yr. Net Flows (millions): $193.07
1-Yr. Return: 7.18%
3-Yr. Annualized Return: 6.06%
5-Yr. Annualized Return: 5.80%
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Fidelity Advisor Freedom 2035 A (FATHX)
YTD Net Flows (millions): ($45.78)
1-Yr. Net Flows (millions): ($117.28)
3-Yr. Net Flows (millions): ($365.50)
5-Yr. Net Flows (millions): ($674.55)
10-Yr. Net Flows (millions): ($564.83)
1-Yr. Return: 7.06%
3-Yr. Annualized Return: 6.76%
5-Yr. Annualized Return: 6.61%
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Great-West Lifetime 2035 Service (MXLLX)
YTD Net Flows (millions): ($102.97)
1-Yr. Net Flows (millions): ($221.91)
3-Yr. Net Flows (millions): ($578.80)
5-Yr. Net Flows (millions): ($676.32)
10-Yr. Net Flows (millions): ($626.52)
1-Yr. Return: 5.58%
3-Yr. Annualized Return: 5.65%
5-Yr. Annualized Return: 6.15%
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JHancock Multimanager 2030 Lifetime 1 (JLFOX)
YTD Net Flows (millions): ($40.91)
1-Yr. Net Flows (millions): ($133.17)
3-Yr. Net Flows (millions): ($373.27)
5-Yr. Net Flows (millions): ($619.72)
10-Yr. Net Flows (millions): ($382.91)
1-Yr. Return: 8.64%
3-Yr. Annualized Return: 6.80%
5-Yr. Annualized Return: 6.42%
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Vanguard Target Retirement 2030 Investor (VTHRX)
YTD Net Flows (millions): ($203.06)
1-Yr. Net Flows (millions): $496.84
3-Yr. Net Flows (millions): $4,423.25
5-Yr. Net Flows (millions): $4,196.62
10-Yr. Net Flows (millions): $17,953.18
1-Yr. Return: 8.08%
3-Yr. Annualized Return: 6.94%
5-Yr. Annualized Return: 6.53%
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MFS Lifetime 2030 R3 (MLTHX)
YTD Net Flows (millions): $7.15
1-Yr. Net Flows (millions): $14.99
3-Yr. Net Flows (millions): $32.65
5-Yr. Net Flows (millions): $59.58
10-Yr. Net Flows (millions): $102.20
1-Yr. Return: 6.21%
3-Yr. Annualized Return: 6.66%
5-Yr. Annualized Return: 6.38%
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Fidelity Freedom Index 2035 Investor (FIHFX)
YTD Net Flows (millions): $260.21
1-Yr. Net Flows (millions): $1,003.23
3-Yr. Net Flows (millions): $1,957.31
5-Yr. Net Flows (millions): $1,565.00
10-Yr. Net Flows (millions): $2,584.05
1-Yr. Return: 8.49%
3-Yr. Annualized Return: 7.95%
5-Yr. Annualized Return: 7.36%
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JHancock Multimanager 2035 Lifetime 1 (JLHOX)
YTD Net Flows (millions): ($39.15)
1-Yr. Net Flows (millions): ($95.08)
3-Yr. Net Flows (millions): ($299.44)
5-Yr. Net Flows (millions): ($508.86)
10-Yr. Net Flows (millions): ($276.13)
1-Yr. Return: 8.67%
3-Yr. Annualized Return: 6.92%
5-Yr. Annualized Return: 6.60%
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Vanguard Target Retirement 2035 Inv (VTTHX)
YTD Net Flows (millions): ($33.37)
1-Yr. Net Flows (millions): $656.33
3-Yr. Net Flows (millions): $3,722.69
5-Yr. Net Flows (millions): $2,081.34
10-Yr. Net Flows (millions): $12,105.21
1-Yr. Return: 7.91%
3-Yr. Annualized Return: 7.08%
5-Yr. Annualized Return: 6.69%
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Mutual of America 2030 Retirement (MURIX)
YTD Net Flows (millions): $4.41
1-Yr. Net Flows (millions): $70.65
3-Yr. Net Flows (millions): $243.31
5-Yr. Net Flows (millions): $354.27
10-Yr. Net Flows (millions): N/A
1-Yr. Return: 6.08%
3-Yr. Annualized Return: 6.21%
5-Yr. Annualized Return: 6.52%
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T. Rowe Price Retirement 2030 (TRRCX)
YTD Net Flows (millions): ($934.23)
1-Yr. Net Flows (millions): ($2,434.29)
3-Yr. Net Flows (millions): ($9,994.68)
5-Yr. Net Flows (millions): ($9,435.73)
10-Yr. Net Flows (millions): ($2,759.01)
1-Yr. Return: 7.86%
3-Yr. Annualized Return: 7.03%
5-Yr. Annualized Return: 6.83%
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Mutual of America 2035 Retirement (MURJX)
YTD Net Flows (millions): $16.22
1-Yr. Net Flows (millions): $66.68
3-Yr. Net Flows (millions): $207.00
5-Yr. Net Flows (millions): $298.53
10-Yr. Net Flows (millions): N/A
1-Yr. Return: 5.55%
3-Yr. Annualized Return: 6.16%
5-Yr. Annualized Return: 6.58%
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T. Rowe Price Retirement 2035 (TRRJX)
YTD Net Flows (millions): ($431.80)
1-Yr. Net Flows (millions): ($1,323.25)
3-Yr. Net Flows (millions): ($6,174.73)
5-Yr. Net Flows (millions): ($5,053.71)
10-Yr. Net Flows (millions): ($278.55)
1-Yr. Return: 7.94%
3-Yr. Annualized Return: 7.20%
5-Yr. Annualized Return: 7.01%
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American Funds 2030 Target Date Retire R6 (RFETX)
YTD Net Flows (millions): $908.09
1-Yr. Net Flows (millions): $3,165.17
3-Yr. Net Flows (millions): $9,433.02
5-Yr. Net Flows (millions): $12,230.77
10-Yr. Net Flows (millions): $13,288.71
1-Yr. Return: 9.84%
3-Yr. Annualized Return: 7.98%
5-Yr. Annualized Return: 7.43%
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American Funds 2035 Target Date Retire R6 (RFFTX)
YTD Net Flows (millions): $965.22
1-Yr. Net Flows (millions): $2,776.45
3-Yr. Net Flows (millions): $8,141.07
5-Yr. Net Flows (millions): $10,197.09
10-Yr. Net Flows (millions): $10,850.83
1-Yr. Return: 10.43%
3-Yr. Annualized Return: 8.68%
5-Yr. Annualized Return: 8.06%
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