After one 2030 target-date fund lost 41% in 2008, legislators in Washington went up in arms against the fund category. One of the most controversial proposals would have limited equity exposure in such funds, but the industry fought back on the grounds the 40 Act gives asset managers leeway to determine asset allocation on their own.
A closer inspection by Morningstar [MORN] found that target-date funds have actually outperformed balanced offerings across the board in the past three years. The average 2035 fund lost 1.93%, while the average balanced fund lost 2.77%.
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