Assessing the inclusion of alternatives in target-date funds

September 18, 2017


As the use of target-date funds (TDFs) in retirement plans increases, some investment managers and defined contribution plan sponsors have begun using alternative investments as a supplement to TDFs' traditional asset classes. But do these alternatives provide long-term benefits?

Our latest Vanguard commentary piece evaluates the impact of two strategies: a REIT overweight or a commodities allocation. It explains why plan sponsors must address whether alternative investments can deliver a long-term benefit that justifies the potential trade-offs.

Use this paper to:

  • Evaluate various alternative investments within a general framework to think through target-date portfolio construction.
  • Analyze the glide paths of TDFs that include a REIT overweight or a commodities allocation.
  • Understand the potential cost, transparency, simplicity, and liquidity trade-offs of adding alternatives to life-cycle products.

Additional materials


  • All investing is subject to risk, including possible loss of principal.
  • Investments in bonds are subject to interest rate, credit, and inflation risk.


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