Comment on Target Date Fund Rules to SEC/DOL: File No. S7-12-10 The False Promise of Target Date Funds as QDIA Investments

fiduciary relief for Target date funds (TDFs) as qualified default investment alternatives (QDIAs). Our recent research (Esch and Michaud, 2014) based on thousands of simulations of possible investment scenarios and verified with long-term historical data definitively demonstrates that TDF glide paths fail to guarantee low-risk wealth at target date and leave investors exposed to large active bets in their portfolios. Since investor risk tolerance varies across individuals and is related to many factors besides age, a QDIA should reflect a neutral level of stock/bond global market risk. Retirement investors are best served with Target Risk Funds (TRFs) in which a fixed stock/bond risk level can be chosen from a sensible set of predetermined settings, either from a neutral perspective or adjustable to user's particular objectives and circumstances. Ideal TRF