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Target-date funds mount comeback after down 2018

Target-date funds mount comeback after down 2018

Target-date mutual funds rebounded in the first quarter of 2019 after a down 2018. The average active target-date fund returned 8.52% through Monday's close, while the average passive fund returned 8.4%.

A look at the returns across the target years shows that the 2019 returns were commensurate with each fund's respective amount of risk. Funds with target dates of 2040 and beyond returned at least 9.95%, while the returns of the nearer-dated funds steadily declined to near 5%. On average, funds across the data set passed their breakeven returns to bring 2018 losses back to zero.

Also of note, Q1 returns between the active and passive sets were much similar than they were in 2019. Passive target-date funds outperformed active funds by about 96 basis points in 2018, while the spread between the two in Q1 2018 was 12 basis points.