Opportunity cost exorbitant, but dirt cheap, Institutional Target Date Retirement Funds (TDFs) have multiple “Emperor’s New Clothes” characteristics coupled with beyond Madoff fraud and manipulation. Yet they are supported by Federal regulators, and forced down the throats of advisory/fiduciary professionals. 

Retirement income portfolios comprised of individual common stocks and various types of income purpose securities have existed for decades in privately managed portfolios. Market Cycle Investment Management (MCIM) programs are a classic, high quality example…similar to the employer pension plans that thrived in years past. 

Wall Street’s newest “head candy” is a brilliantly named “fund of funds” that satisfies regulatory cost emphasis; but they don’t provide meaningful retirement income? 

This from a major provider’s 2015 TDF product description page:

 MCIM portfolios adjust the asset allocation over time, but they place about five times as much spending money in retiree checking accounts. True retirement programs are income focused.

Here’s the 11/05 content of the company’s 2015 TDF, with an Expense Ratio (ER) = 0.16%:

Total Stock Market Index Fund ……………….29.3% (3909 stocks*)  (yield = 1.8%) (ER= .17%)
Total International Stock Index Fund ……….19.4% (6118 stocks*)  (yield = 0%) (ER = .22%)
Total Bond Market II Index Fund ……………..30.0%  (yield = 2.1%) (ER = 0.10%)
Total International Bond Index Fund…………12.8%  (yield = 0.9%) (ER = 0.23%)
Short Term Inflation-Protected Index Fund…8.5%  (yield = 0.7%) (ER = 0.20%)