According to Morningstar, target-date funds hit a record $3.5 trillion in assets under management in 2023 due to a combination of capital appreciation and investors moving $522 billion into the popular fund-of-funds products over the past four years.
However, they both have a "glide path," which lowers the allocation to equity securities as the funds approach and enter retirement. Target-date funds with a glide path "to" retirement maintain the equity allocation throughout retirement, while a target-date fund "through" retirement lowers the stock exposure 10-15 years into retirement.
CITs are tax-exempt retirement plans sponsored by banks and trust companies that combine the assets of various retirement accounts under one specific fund with a specified investment strategy, differing from target-date mutual funds.
The funds do all the heavy lifting for the "glide path," so the fees are reasonable, making them a suitable choice for investors looking to preserve capital to and into retirement.
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