Target Date Funds Need Depth & Breadth, Not Gold & Liquid Alternatives

Target date funds enable employees to become better savers as opposed to professional investors, said James Lauder, CEO of Global Index Advisors, subadvisor to Wells Fargo Advantage Funds. Lauder added that breadth and depth of diversification are paramount when constructing a target date fund, as is the need to constantly rebalance the portfolio in order to prevent a hot asset class from becoming overweight. He said a target date portfolio need not hold gold directly as a hedge against inflation, but should hold miners and other commodity plays. Finally, Lauder warned against holding liquid alternatives in a target date fund due to their complexity.