Target-date funds in Ibbotson Associates' research universe returned an average of 27.1% in 2009, compared to a 30.8% loss in the previous year.
“As the market goes, so goes the target-date funds,” Thomas Idzorek, Ibbotson chief investment officer and director of research, said in an interview.
Among asset classes in the target-date universe tracked by Ibbotson, emerging market equity returned 79% — a gain Mr. Idzorek called “eye-popping” — while high-yield bonds gained 58.2%. Domestic large-cap growth equity gained 37.2%, while U.S. large-cap value equity rose 19.7%. TIPS returned 11.4%.
The Ibbotson report noted that fund inflows to target-date funds improved “significantly” in the fourth quarter, adding $13.9 billion compared to the $11 billion in inflows for the third quarter.
“Thanks to the stock market's recovery as well as new investments,” assets in target-date funds grew from $159 billion by the end of 2008 to $256.5 billion by the end of 2009, the Ibbotson report said.
Ibbotson, a subsidiary of Morningstar, included target-date funds that had at least 12 months of operation for its analysis in the respective years, 264 in 2008 and 322 last year.