TIAA Institute Recognizes Research on the Rise of Target Date Funds and the Impact on Markets

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Jan 07, 2025, 10:00 ET

Academics from the Massachusetts Institute of Technology (MIT) and Brandeis University examine target date fund trading activity and the impact on market volatility and individual retirement savers.

NEW YORK, Jan. 7, 2025 /PRNewswire/ -- Jonathan A. Parker, Antoinette Schoar, and Yang Sun have been honored with the 29th annual Paul A. Samuelson Award by the TIAA Institute for their study, "Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds." The research analyzes the market impact of Target Date Funds (TDFs), one of the most significant financial innovations widely used by individual retirement savers in America.

The study shows that the rules guiding trades by TDFs as they rebalance have caused substantial changes in how money moves in and out of mutual funds, suggesting these changes are affecting stock returns and might even be reducing volatility in the stock market.

"TIAA has a long history of advocating for secure and dignified retirements," said Surya Kolluri, head of the TIAA Institute. "This research shows how TDFs can help support long-term retirement goals by appropriately adjusting asset allocations over time and by bringing greater market stability. We're proud to recognize research that offers these types of best practices for improving retirement outcomes."

"It's a unique honor to receive the Samuelson Award. This recognition highlights the real-world impact that academic work has on optimal portfolios – similar to the research Samuelson conducted in 1969 – and underscores the importance of retirement plan design and financial tools," the authors said.

Named in honor of the Nobel Prize winner and former CREF trustee, the Paul A. Samuelson Award is presented annually by the TIAA Institute to recognize an outstanding research publication designed to increase Americans' lifelong financial well-being. Winners are chosen by an independent panel of judges, consisting of Institute Fellows and previous award recipients.

The 2024 Samuelson Award panel of distinguished judges include:

Scott Cederburg, The University of Arizona
Jonathan Reuter, Boston College
Sita Nataraj Slavov, George Mason University
Carly Urban, Montana State University
Stijn Van Nieuwerburgh, Columbia University

Learn more about the TIAA Paul A. Samuelson Award here.

About the TIAA Institute
The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in-depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success. To learn more about our work and engage with our community of thought leaders, visit tiaainstitute.org and follow us on X at @TIAAInstitute.

About TIAA
TIAA is a leading provider of secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions¹. It is the #1 not-for-profit retirement market provider¹, paid more than $5.7 billion in lifetime income to retired clients in 2023 and has $1.4 trillion in assets under management (as of 9/30/2024).²

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¹ As of June 3, 2024. Based on data in PLANSPONSOR's 2024 DC Recordkeeping Survey, #1 by total 403(b) assets and #1 by 403(b) ERISA plans.

² As of September 30, 2024, assets under management across Nuveen Investments affiliates and TIAA investment management teams are $1,400 billion.

This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual's own objectives or circumstances which should be the basis of any investment decision.

As with all mutual funds, the principal value of a target date fund isn't guaranteed at any time, including at the target date, and will fluctuate with market changes. The target date approximates when investors may plan to start making withdrawals. However, you are not required to withdraw the funds at that target date. After the target date has been reached, some of your money may be merged into a fund with a more stable asset allocation.

Target date funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. In addition to the fees and expenses associated with the target date funds, there is exposure to the fees and expenses associated with the underlying mutual funds.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 or go to www.TIAA.org/prospectuses for current product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing.

TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.

TIAA Institute is a division of Teachers Insurance and Annuity Association of America (TIAA), New York, NY

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SOURCE TIAA Institute