These are really interesting funds because of how the assets are managed. The assets are given to three different managers, an active growth manager, an active value manager, and an index manager. The large cap gets a core active manager as well. Some of the managing companies are good at the job. Don't know much about the rest. I would take this option, except I think putting 50 percent in international would be too high for me. Most US companies derive a great deal of their business from overseas, so investing in US companies exposes you to other economies, developing and developed. I don't need the volatility of companies that may not adhere to GAAP and are located in countries that might not be as stable or business friendly as the US.
The target date fund's underlying funds are hard to decipher. I would be reluctant to go with that option unless I had a more detailed understanding of the component funds.
I agree, they are interesting. I was surprised to see that the chart on the page is actually a chart of the managers, and not stocks.
Because the fees are higher on the US Small/Mid and International funds, I could even go a lot higher with US Large Cap to try to lower the overall fees. My 50% allocation to international stocks just came from The Elements of Investing book I read recently. In there, they suggest that your stocks be split equally between a US index fund and an international index fund. But the final allocation is, of course, up to me.
My biggest concern with the Target Date Fund is that it's currently holding 6.6% cash. If I wanted my money in cash, I'd keep it at home or in the bank. It also might get a little too conservative for me over time to the point where I might have to move to a 2060 fund when they offer it. But that should be easy enough to do and I won't have to worry about taxes.
I hate target date funds. But in your case I'd go with the target date fund, simply because its much cheaper.
I like your proposed portfolio's makeup, don't get me wrong, but expenses matter most and the makeup of the target date fund looks very reasonable.
AZ
It does seem like a pretty reasonable target date fund. But I wonder if the extra fees would be worth going with the 3 funds instead because the returns would most likely be better? There would of course be more risk, but I have time to let the market recover. For all I care, it can crash now so I can buy cheaper stocks. But I'm sure a lot of you would prefer that it didn't!
