Citing the vast disparity in the performance of target-date funds,
Target-date funds have come under scrutiny in recent months, said John Rekenthaler, vice president of research. Disparity in the performance in 2008 among funds with the same target-date caused many to second guess the funds investment policies and strategies, leading to the joint hearing before the
Morningstar will annually examine target-date funds via five measures, two qualitative and three quantitative: people, parent, performance, portfolio and price. The best score a fund can receive is 100, with a maximum of 20 for each measure. Each scoreabove average, average, below average or bottomwill be accompanied by detailed commentary by a Morningstar fund analyst.
Many investors intend to hold their target-date funds for decades and use them as a primary retirement savings vehicle, Rekenthaler added. Its critical to invest in funds run by companies that have a strong history of putting shareholders first.