RT Journal Article
SR Electronic
T1 Using a Life Cycle Model to Design a Target Date Glidepath
JF The Journal of Portfolio Management
FD Institutional Investor Journals
SP 228
OP 240
DO 10.3905/jpm.2022.1.337
VO 48
IS 4
A1 Ilia Lanski
A1 Raj Paramaguru
A1 Wesley Phoa
A1 Yung Wang
A1 P. Brett Hammond
YR 2022
UL https://pm-research.com/content/48/4/228.abstract
AB Few practitioners use life cycle models for the actual design and management of target date funds. The authors argue that life cycle models should be applied in this context and, conversely, that life cycle model development can and should be informed by questions and challenges arising from target date fund design and management. They evaluate a real-world use case by examining the development of a new life cycle model to serve an existing set of target date funds. In a positive feedback loop, questions arising from a review of the current glidepath design informed construction of the life cycle model and, in turn, the model generated both qualitative and quantitative results that informed the glidepath review. Specifically, the authors show how the model was used to determine the appropriate degree of stock–bond allocation flexibility at each stage along the glidepath.