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. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Variable Annuitization

    An annuity option in which the amount of income payments received ...
  3. Gold IRA

    Definition of Gold IRA
  4. Pension Risk Transfer

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

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

    A type of target-date retirement fund whose asset allocation ...
Related Articles
  1. Retirement

    3 Ways To Make Your Retirement Funds ...

  2. This pre-packaged retirement investment option could be the perfect fit for some investors, and a downfall for others. Which are you?
    Retirement

    Who Actually Benefits From Target Date ...

  3. Target date mutual funds can be an alternative to bonds and CDs for investors who do not wish to actively manage their savings.
    Retirement

    An Introduction To Target Date Funds

  4. Budgeting

    How To Budget Your Retirement Funds ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center