Fun with compounding. So far this year, target date fund (TDF) returns are in line with their recent past, but 133% of their longer term history. This is interesting because it demonstrates the impact of a losing year, which in this case is 2022. Including 2022 in the TDF performance record reduces returns by a third. At $5 trillion and growing, TDFs are more than half of 401(k) assets.
The S&P lost 19.4% in 2022. What will happen to TDF performance after the next crash, which many believe will be much worse than 2022?
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