The last three years have been extremely volatile, by including the start of the recession, the mortgage meltdown and the beginning of the TARP program.
This volatility was reflected in the following tables which show the year-to-date and the three-year performance of the top target-date mutual funds in the largest ten target-date families.
Ranking target-date funds (TDFs) is difficult. First, all of the largest target-date fund companies offer varying numbers of (TDFs). Second, by design, the funds have varying asset mixes and asset classes, depending on how far they go into the future. The funds which should carry the most risk are those which extend farthest into the future. In some cases, TDFs are listed 45 years ahead for those retiring in 2055.
Still, it is possible to find the best performing funds across the entire series of the top 10 target-date fund families.
Chart 1 shows the year-to-date rankings (through Oct. 31, 2010). The chart shows a 2.45% performance gap for the YTD-period from the top performing TDF — Principal Lifetime 2010 Fund (PTTIX) — to the lowest — American Funds Target-Date Retirement 2030 (AAETX).
Chart 2 shows the three -year ranking of the top-performing TDFs covering the more volatile period, which includes the start of the current recession. Note that the number of TDF funds has increased over the years, which affects the average return. Comparing the YTD versus the three-year performance highlights the volatility of these funds in dynamic market conditions and the dramatic changes in fund family leadership.
Separately, in the most recent year-to-date performance (through Oct. 31, 2010) comparing the average performance of ten largest TDF fund families, Principal emerged at the top with a 9.84% return, while Black Rock brought up the rear by posting a 7.67% return.
Chart 1–Top-Rated Target-Date Funds
(Average year-to-date returns through 10-31-2010)
| Target-Date Fund / Share Class | Trading Symbol | Avg. YTD Return | Fund Family Avg. 1-Year Return |
| Principal Lifetime 2010 (I) | PTTIX | 10.93% | 17.26% |
| Wells Fargo Adv. 2050 (I) | WFQFX | 10.46 | 15.00 |
| T. Rowe Price Ret. 2030 | TRRCX | 9.79 | 16.73 |
| TIAA-CREFF Lifecycle 2045 (I) | TTFIX | 9.24 | 15.10 |
| John Hancock Lifecycle 2010 (A) | JLAAX | 9.21 | 16.87 |
| Fidelity 2045 (A) | FFFZX | 9.07 | 14.88 |
| Vanguard 2010 (I), 2015 (I) | VTENX, VTXVX | 9.02 | 15.18 |
| ING Solutions 2045 (I) | ISRIX | 8.99 | 14.51 |
| BlackRock Lifecycle Prepared 2015 (A) | BAPBX | 8.79 | 14.76 |
| American Target-Date Ret. 2030 (A) | AAETX | 8.48 | 14.82 |
Source: 2010 Morningstar Inc. Funds selected from the largest 10 TDF families.
Chart 2–Top-Rated Target-Date Funds, 3-Year Period
(Returns through 10-31-2010)
| Target-Date Fund/ Share Class | Symbol | 3-Year Return | Fund Family Avg. 3-Year Return |
| Wells Fargo Advantage DJ Target 2020 (A) BlackRock Lifecycle Prepared 2015 (A) | STTRX BAPBX | 0.70% 0.34% | -1.86 -3.72 |
| T. Rowe Price Retirement 2010 | TRRAX | 0.18 | -2.81 |
| Vanguard Target Retirement 2015 Inv | VTXVX | -0.76 | -2.54 |
| JHancock2 Lifecycle 2010 (A) | JLAAX | -1.16 | -4.50 |
| ING Solution 2015 (I) | ISOIX | -1.72 | -5.02 |
| American Funds Trgt Date Ret 2010 (A) | AAATX | -2.23 | -4.10 |
| Principal LifeTime 2010 (I) | PTTIX | -2.64 | -6.48 |
| TIAA-CREF Lifecycle 2025 Retirement | TCLFX | -4.13 | -3.84 |
| Fidelity Freedom 2045 | FFFGX | -6.13 | -3.37 |
Source: 2010 Morningstar Inc. Funds selected from the largest 10 TDF families.
