Managed as a collective
In many ways TDFs operate in the same way as a multi-asset fund, and all the switching is done in the fund. Compared to lifestyling this cuts down on many transactional costs.
Mr Cobbe says: "If they're all in the same group, they're being managed as a collective and that reduces dealing costs and improves consistency."
Economies of scale kick in, and by having everyone in the same cohort, develops consistency for that group of people.
Mr Cobbe confirms: "It's about the investment journey rather than measuring points in time. It comes down to risk management. If you're a Sipp provider and trying to think about customer outcomes, thinking about scheme members in terms of cohorts enables you to share the balance of risk and return as appropriate."
Elston Consulting has put together performance data on two retail propositions - from Vanguard and Architas.
It shows that cumulative returns for Architas 2050 funds are looking at just over 40 per cent, while Vanguard is just over 35 per cent; the 2020 cohort for Architas is around 22 per cent and 27 per cent for Vanguard.
Annualised returns increase as each cohort gets further from imminent retirement dates. Annualised returns for Vanguard 2020 cohort are 10 per cent, the 2030 cohort is 12 per cent and the 2040 cohort is just over 13 per cent.
The Architas TDFs perform slightly better with the 2040 cohort looking to return just over 14 per cent, although the 2020 group is looking at an annualised return of about 8.5 per cent.
Annualised 260-day volatility is about 6 per cent for Vanguard, and just over 4 per cent for Architas in the 2020 fund; for the 2045 fund it is just over 8 per cent volatility for Vanguard and about 9 per cent for Architas.
Clearly, Target Date Funds have a lot to offer, and have been shown to be popular in the US.
It is a question of consumers becoming more aware of them and knowing where to look for these funds, and trusting the investment industry to deliver.