Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds

Office of Alumni and External Relations    2021-02-23

Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds

Guest: Yang Sun, Assistant Professor of Finance, Brandeis International Business School, Brandeis University

Host: Xu Wenjian, Assistant Professor, Antai

Time: Wednesday, Mar 3rd, 2021, 09:00-10:30

Venue: Zoom (for conference number and password, pleas send email to by 18:00, Mar 2nd)


Along with fixed share funds, the rise of Target Date Funds (TDFs) has moved a significant share of retail investors into contrarian trading strategies that rebalance between stocks and bonds so as to maintain age-appropriate portfolio shares. We show that i) TDFs actively rebalance within a few months following differential asset-class returns to maintain stable portfolio shares, ii), this rebalancing drives contrarian rebalancing flows across funds held by TDFs, iii) investors do not move funds into or out of TDFs to offset these flows, and iv) using fund holdings to measure (indirect) TDF ownership, these flows have quantitatively large effects on stock prices. Continued growth in TDFs may dampen stock market volatility and increase the transmission of shocks between asset classes.


Prof. Sun received her PhD in Financial Economics from MIT Sloan School of Management and B.S. in Finance from the Wharton School, University of Pennsylvania. Prior to joining Brandeis International Business School, she had worked in University of Hong Kong for two years. Her primary research interests include household finance and corporate finance, such as issues in corporate governance and payout policy. Her work has been published in top journals such as the Review of Financial Studies and Management Science.

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