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November 21, 2012 at 07:00 PM
The latest report on fund performance from Morningstar’s Ibbotson Associates shares the results of the third quarter. During the past three months, for instance, target-date, or target-maturity, funds tracked in the group’s research gained 5.1% on average for the quarter. Plus, they’ve improved 18.9% over the past 12 months. During the same period, the S&P 500 rose 6.4% and 30.2%, respectively.
In addition, flows into these funds have remained strong, with nearly $12 billion flowing into the category during the quarter, says Ibbotson’s report. As of Sept. 30, total assets in target-maturity funds were nearly $466 billion, a 36% increase from a year ago with Fidelity, Vanguard, and T. Rowe Price holding about 75% of total assets.
As for the range of gains for all target-date funds posting gains, those closest to their retirement date improved 1.8% for the third quarter, while equity-heavy funds furthest from retirement ticked up close to 7.7%.
“Still, the number of funds outperforming their respective Morningstar index in the third quarter was low: 39 out of 398 target maturity funds, or roughly 10% of the fund universe outperformed. The index series held up exceptionally well this quarter outperforming more than 90% of retail target date funds,” wrote authors Jeremy Stempien and Cindy Galiano.
Equities across the globe did well in the most recent period, with non-U.S. developed (7%) and emerging-market equities (7.9%) outperforming U.S. equities. U.S. large caps did better than small caps, while value beat out growth. Commodities returned nearly 10% in the quarter, and U.S. REITs showed moderate performance with a 1% return.
