Through Fund

AAA

DEFINITION of 'Through Fund'

A type of target-date retirement fund whose asset allocation includes higher risk and potentially higher return investments "through" the fund’s target date and beyond. A "through" fund might make sense for individuals who only need to sell a small percentage of their investments each year to meet their retirement living expenses and who want to continue investing during their retirement years. 

INVESTOPEDIA EXPLAINS 'Through Fund'

The farther away a fund’s target date is, the more stocks it will usually hold relative to bonds. A "through" fund takes more risk, for longer, than a "to" fund. Both reach conservative positions at the target date, but through funds invest less conservatively. This gives them the potential for greater returns – and also greater losses – from the beginning. In addition, their strategy means that a through fund will contain assets that can grow beyond the target date, enabling you to continue to build assets during your retirement. By doing this, a through fund also lowers the risk of outliving your retirement savings.

Before choosing a specific target-date fund for your retirement savings, research its glide path (how it progressively becomes more conservative) to learn how the fund’s asset allocation will change over time. Also determine whether it is a "through" fund or a "to" fund.

A through target-date 2045 fund might have a glide path that results in an asset allocation of 60% stocks and 40% bonds and short-term funds in 2045. The percentage of stocks would decrease gradually during your retirement years, while the percentage of bonds and short-term funds would increase. But even at the target date, there would be both stocks and bonds/short-term funds in your through fund and this pattern would continue during retirement.

Through funds are meant to be held past their target dates, while to funds are likely to work best for you if they are cashed out and/or reinvested at their target date.

 

 

RELATED TERMS
  1. Gold IRA

    Definition of Gold IRA
  2. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all ...
  3. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  4. To Fund

    A type of target-date retirement fund whose asset allocation ...
  5. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  6. Drawdown Percentage

    The portion of a retirement account that a retiree withdraws ...
Related Articles
  1. New Retirement Plan Limits For 2011
    Taxes

    New Retirement Plan Limits For 2011

  2. How Much Social Security Will You Get?
    Retirement

    How Much Social Security Will You Get?

  3. Borrowing From Your Retirement Plan
    Retirement

    Borrowing From Your Retirement Plan

  4. The Income Property: Your Late-In-Life ...
    Home & Auto

    The Income Property: Your Late-In-Life ...

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center