TY  - JOUR
AU  - Balduzzi,Pierluigi
AU  - Reuter,Jonathan
TI  - Heterogeneity in Target-Date Funds and the Pension Protection Act of 2006
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17886
PY  - 2012
Y2  - March 2012
UR  - http://www.nber.org/papers/w17886
L1  - http://www.nber.org/papers/w17886.pdf
N1  - Author contact info:
Pierluigi Balduzzi
Carroll School of Management
Boston College
330B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-3976
Fax: 617/552-3985
E-Mail: pierluigi.balduzzi@bc.edu

Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu
AB  - This paper studies the evolution of the market for target-date funds (TDFs) between 1994 and 2009. We document pronounced heterogeneity in the TDF universe:  TDFs with the same target date have delivered very different returns because of differences in systematic risk in the stock allocations, and because of differences in the stock versus bond allocations. This heterogeneity has increased over time, especially after the passage of the Pension Protection Plan of 2006.  Indeed, we can attribute the increased heterogeneity in TDFs to the entry of new fund families in the TDF market between 2007 and 2009. These developments in the TDF market are consistent with new entries in the market adopting a product-differentiation strategy. Our findings suggest that the widespread adoption of TDFs will not result in returns that are similar across investors enrolled in different 401(k) plans, and that the current proposals for further disclosure in TDF offerings may have little impact on the incentive for fund families to offer similar risk profiles.
ER  -