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Morningstar: TDFs Did Well in 2012

While the Wall Street Journal took a shot at TDFs this week, especially regarding the 2015 funds, Morningstar has a contrary view, noting that overall the category performed well — even the 2015 vintage. The highest-performing category was the 2035 sleeve, with a 14.7% return; the top fund was JP Morgan SmartRetirement 2045 at 18.1%.

Diversification helped, with TDFs tapping into high yield bonds, Treasury Inflation-Protected Securities and emerging market debt. Fund companies like T Rowe Price that favor equities did better than those that were more defensive. Others that deployed tactical allocations allowing their fund managers more flexibility, like Putnam and American Funds, did well. From the pre-crisis peak in 2007 through the end of 2012, all but one of the currently extant 2015 funds have recouped their losses, and most have produced double-digit positive gains.

Take that, WSJ!

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