The distinguishing characteristic of a target date fund is that is automatically changes its asset allocation from risky asset to defensive assets over its lifetime. Hence, it is often considered as appropriate vehicle to manage a person’s superannuation account on the basis that these funds map the preference of members to take high risks when they are young but transition to being highly risk averse as they approach retirement.

It is a concept that was first developed in the early 1990s but began to become popular in the US after ...