On optimal allocations of target-date funds

Radu Gabudean, Francisco Gomes, Alexander Michaelides, Yuxin Zhang

Research output: Journal PublicationArticlepeer-review

2 Citations (Scopus)


We study optimal life-cycle portfolio allocation and its application to target-date fund (TDF) design. We show that optimal TDF allocation must be explicitly linked to a savings rate; for example, a higher savings rate generating higher financial wealth accumulation should necessarily come with a more conservative TDF. Further, we quantify the extent to which accumulated wealth, the investing environment, and participant characteristics affect TDF allocations and compare the resulting optimal allocations against the observed universe of US TDF products. Plan sponsors and asset managers can use these findings to improve TDF selection and design.

Original languageEnglish
Pages (from-to)58-79
Number of pages22
JournalJournal of Retirement
Issue number2
Publication statusPublished - Dec 2021
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Geriatrics and Gerontology
  • Organizational Behavior and Human Resource Management
  • Life-span and Life-course Studies


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