Will your lifestyle fund destroy your future wealth?
Lifestyle pension funds, sometimes called Lifecycle or Target Date Funds, are totally in vogue. They appear to be the weapon of choice for pension providers and advisers alike. I did a quick Google search for “lifestyle pension funds” and found 2,910,000 matching results. In the US, Vanguard estimate that more than half of all defined contribution pensions are now lifestyle funds.
But there’s an inherent flaw in the way strategic asset allocation is determined for these funds. And it could be destroying your wealth.Continue reading