Because for a fund, the capital is usually invested in many securities, so the investment risk is dispersed accordingly. After all, the probability of collective problems of multiple securities is still smaller than that of a single securities.
And a pension target fund invests its funds in multiple funds, so the investment risk will be more dispersed.
For example, if a foundation invests its funds in 10 stocks, then the risk of the fund comes from this 10 stock. If a pension fund invests its funds in 10 funds, it is equivalent to indirectly investing in 100 stocks, and its main risk also comes from this 100 stock.
Obviously, a fund that only bought 10 shares will have a great impact on the fund's performance if there are problems with one or two stocks it bought. One or two of the 100 stocks indirectly bought by pension funds have problems, and the risk is relatively small.
Therefore, the pension target fund is more stable than the fund it invests in.
As a pension manager, the first thing you need is the stability of income. Because the purpose of buying pension financing is to save some money for the future pension, there can be no mistakes, otherwise the future pension plan will be ruined.
In addition, as an old-age financial management, its yield is at least higher than the bank deposit interest rate. Otherwise, everyone can deposit money in the bank. What else can I do to buy a pension? After all, bank deposits are guaranteed capital and interest, while pension financing is neither guaranteed capital nor interest.
However, the pension target fund may be higher than the bank deposit interest rate in the overall rate of return, but it is hard to say in the stability of income.
Because the income stability of pension target funds is only relative, the stability of different types of pension target funds may vary greatly, mainly related to their investment direction.
For example, pension funds that invest in stock funds have a wide range of net value fluctuations, and there is also the risk of losses when the entire stock market falls. At this point, the stability of funds may not be as good as that of bond funds.
In short, the pension target fund has some characteristics as a kind of pension financing, but whether it can support the elderly depends on whether it can buy good products.