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If this guy got paid to write article, he will write. It's an occupation...
They simulated a common glide path strategy over 141 years and found that an investor using a 50 percent stock and 50 percent bond allocation, and regularly rebalancing, would likely have had better results than the target-date fund.
Not even a statement of fact. Giving Research Affiliates a bad name in the process. No link to actual study. We don't know if there was such a study. 141 years - F me! Regular balancing - how regularly? Totally idiotic.
Yahoo Finance reader Greg Woodruff from Bakersfield, California asked Warren Buffett, the CEO Berkshire Hathaway (BRK-A, BRK-B), if target date funds are really adding value.
“No, probably not,” Buffett said during a wide-ranging interview with Yahoo Finance’s Andy Serwer. “The S&P 500 Index Fund is the one to use. That’s the one I used in that bet I made for ten years. It’s the one I’ve told the trustee for my wife to put 90% of the funds I leave her in to.”
Also, the idea with target date funds is to use them for substantially all of your assets. If you don't, you're working against the glide path which is designed for your overall portfolio.
Suppose the glide path for your age says you should be 50/50 stocks/bonds and you have 10% in the tdf and 90% in equity funds. Then your mix is 95/5. What's the point of using the tdf? If you want to control the portfolio allocation yourself, it's easier to work with fixed allocation funds than with ones that "glide".
... He has also written on portfolio risk management for Barron’s Financial Weekly. Additionally, he assists in the management of the investment portfolio of the Community Foundation of Sarasota County.
Dr. Stepleman holds a Ph.D. in Mathematics from the University of Maryland and a B.S. in Physics from the State University of New York at Stony Brook. He has taught at the University of Virginia and Rutgers University. He also spent 20 years at Exxon Research and Engineering Company and seven years with the RCA David Sarnoff Research Center. ...
Some of his arguments do seem lame. For example, on the one hand lamenting that there's not agreement on what a "correct" glide path is; on the other complaining about "one size fits all". There isn't agreement on a correct glide path precisely because one size doesn't fit all. Different glide paths are offered because what is correct for one person is not correct for another.
Some of his points IMHO not lame at all. "Research by Wade Pfau and Michael Kitces suggests a more optimal glide path ramps down even more severely to 10 percent stocks at retirement and then starts increasing the stock holding gradually to 50 percent. Their research indicates this glide path can provide better protection against sequence of return and longevity risks."
Comments
They simulated a common glide path strategy over 141 years and found that an investor using a 50 percent stock and 50 percent bond allocation, and regularly rebalancing, would likely have had better results than the target-date fund.
Not even a statement of fact. Giving Research Affiliates a bad name in the process. No link to actual study. We don't know if there was such a study. 141 years - F me! Regular balancing - how regularly? Totally idiotic.
Anyone from Research Affiliates reading?
https://finance.yahoo.com/news/warren-buffett-target-date-funds-arent-way-go-175409855.html
https://mutualfundobserver.com/discuss/discussion/40833/target-date-funds-buffettAlso, the idea with target date funds is to use them for substantially all of your assets. If you don't, you're working against the glide path which is designed for your overall portfolio.
Suppose the glide path for your age says you should be 50/50 stocks/bonds and you have 10% in the tdf and 90% in equity funds. Then your mix is 95/5. What's the point of using the tdf? If you want to control the portfolio allocation yourself, it's easier to work with fixed allocation funds than with ones that "glide". It's easy enough to find out who this guy is:Some of his arguments do seem lame. For example, on the one hand lamenting that there's not agreement on what a "correct" glide path is; on the other complaining about "one size fits all". There isn't agreement on a correct glide path precisely because one size doesn't fit all. Different glide paths are offered because what is correct for one person is not correct for another.
Some of his points IMHO not lame at all. "Research by Wade Pfau and Michael Kitces suggests a more optimal glide path ramps down even more severely to 10 percent stocks at retirement and then starts increasing the stock holding gradually to 50 percent. Their research indicates this glide path can provide better protection against sequence of return and longevity risks."
Of course I would think this part had substance. I have to. I said the same thing two days ago:
https://mutualfundobserver.com/discuss/discussion/comment/111071/#Comment_111071