Nearer dated target-date funds outperformed longer dated funds during the first half of 2020 due to volatility in equity markets, according to a report from S&P Dow Jones Indices.
The index company's Target Date Scorecard said higher equity allocations made longer dated S&P Target Date indexes more sensitive to equity market movements in the first half of the year, but did post stronger returns in the second quarter.
For the first half of 2020, the Target-Date 2020 index returned -1%, and returns for each successive target date were lower. The 2025 index returned -2.27%, the 2030 index returned -3.58%, the 2035 index returned -4.9%; the 2040 index, -5.78%; 2045, -6.35%; 2050, -6.57%; 2055, -6.78%; and 2060-plus, -6.67%.
For the one year ended June 30, nearer dated funds performed better. The highest was the 2010 index at 5.19% and the lowest was the 2055 index at 0.89%. For longer time horizons, however, longer dated funds performed better due to higher allocations to domestic large-cap equities, the report said.
