When an investor owns a target date fund, the asset mix shifts over time. For younger investors, the portfolio emphasizes equities and allocates less to long-duration fixed income. When investors get older and approach retirement, target-date funds reduce the equity exposure and add duration to fixed income. Tyler Thorn, a multi-sector portfolio manager at PGIM Fixed Income, told Pension & Investments that this is the opposite of how duration should be managed. He believes that a target-date fund’s duration goes in the wrong direction. He stated, “Instead of starting low and rising with age, it should start high and decline with age.” Thorn believes that younger investors need more duration exposure since they will be spending a lot more in the future. Thorn also believes that if these changes were implemented, they could make the 60/40 portfolio more viable.

Finsum:A PGIM Fixed Income manager believes that the 60/40 portfolio can be fixed if bond duration was managed differently.