RT Journal Article SR Electronic T1 Balancing on the Life Cycle: Target-Date Funds Need Better Diversification JF The Journal of Portfolio Management FD Institutional Investor Journals SP 12 OP 27 DO 10.3905/jpm.2016.42.4.012 VO 42 IS 4 A1 Jusvin Dhillon A1 Antti Ilmanen A1 John Liew YR 2016 UL https://pm-research.com/content/42/4/12.abstract AB Traditional life–cycle strategies have some serious shortcomings. In this article, the authors focus on five of those weaknesses: home bias, inflation sensitivity, concentrated risk, sensitivity to episodes of equity market turbulence, and a lack of highly diversifying alternative strategies. Some of these shortcomings, such as home bias, are easier to fix than others, which may require getting comfortable with financial tools like leverage. Using over 100 years of data, the authors show that embracing financial innovation and addressing these shortcomings could have meaningfully improved historical performance. As life-cycle funds become a bigger part of the investment landscape, the authors argue that it’s becoming increasingly important to utilize more modern investment techniques—many of which have long been part of the institutional investing arsenal.TOPICS: Mutual funds/passive investing/indexing, wealth management