Measure how well a target date fund has surfed the highs and lows

Target date funds are designed to balance growth and protection, so they should be judged on more than just returns in a rising market. Capture ratios can help advisors see how well a fund participates in upside, limits downside, and delivers that all-important balance over time. A strong overall capture ratio may signal a fund that is better suited for participants who need both accumulation and preservation as retirement approaches.

This matters because QDIA choices must serve investors with very different time horizons. Funds that hold up well in downturns can help reduce the impact of sequence risk, while still needing enough upside to support long-term retirement savings. Used alongside other due diligence tools, capture ratio analysis can offer a clearer view of which target date series is most aligned with participant outcomes.