What goes into a stronger target date fund
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TEN YEARS AGO, comparing target date funds was a more straightforward exercise.
“There were not a lot of options,” says Charles-Antoine Larochelle, CFA – director, investment solutions, group retirement savings at Desjardins Insurance.
The challenge, Larochelle argues, isn’t that target date funds (TDFs) have become harder to understand individually. It’s that there are now far more ways to build what appears to be the same solution. Glide paths differ. Some managers rely primarily on active management, others on passive strategies or a blend of both. Alternative assets have become more common. Comparing different TDF approaches on an apples-to-apples basis isn’t always simple.
Those are the questions behind Desjardins Insurance’s own Progression target date funds. Rather than simply offering another option in a crowded market, Larochelle says the objective was to build a solution that reflected Desjardins Insurance's own investment philosophy while making it easier for advisors and plan sponsors to compare the funds alongside other target date offerings. That also meant combining internal investment expertise with external managers selected for their complementary strengths.
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“When you go off the shelf, there are different things that you like and others perhaps that you don’t. Instead of simply offering what was out there, we decided to create our own”
Charles-Antoine Larochelle, Desjardins Insurance
From product choice to portfolio design
The sheer number of target date funds speaks to something beyond product innovation. It’s a measure of how central the category has become to workplace retirement saving.
Canadian target date strategies now hold roughly $159.4 billion at year-end 2025,1 according to Morningstar’s Canadian Target-Date Funds: Trends, Performance, Market Leaders. Much of that growth, as Morningstar highlights, comes through group retirement plans, where target date funds often serve as the default investment option. The increase in assets has brought more variety in how the funds are put together, and that variety is exactly what produces two strategies that read alike on paper but drift apart over a member’s lifetime.
Larochelle’s career has given him both perspectives. Before joining Desjardins Insurance, he worked in institutional investment consulting. Today, his role combines oversight of the firm’s investment solutions and regular conversations with consultants and plan sponsors.
“You maintain that finger on the pulse of what’s happening in the market and what clients are looking for,” he says.
That perspective informed Desjardins Insurance’s decision to build Progression internally rather than rely exclusively on an off-the-shelf target date strategy.
“When you go off the shelf, there are different things that you like and others perhaps that you don’t,” Larochelle says. “Instead of simply offering what was out there, we decided to create our own.”
Built around downside risk
Desjardins Insurance built Progression target date funds around a specific priority: managing risk, and downside risk in particular. Larochelle says a lot of target date solutions have taken on more risk over the years, an approach that has generally paid off through a market cycle that’s been mostly positive. He doesn’t see that as proof the approach is right over the long term. Target date funds are meant to carry a member through a full career and into retirement, not just through a favourable stretch of markets.
Larochelle says Desjardins Insurance has long viewed risk management as the defining feature of Progression. One measure he points to is standard deviation, a common measure of portfolio volatility. According to Desjardins Insurance’s analysis, the Progression portfolios have generally experienced lower volatility than many comparable target date strategies, both during the early accumulation years and as plan members approach retirement.
“A lot of target date solutions have taken on a lot of risk,” Larochelle says. “That has paid off quite well through the recent cycle as markets have been mostly positive.”
For Desjardins Insurance, that makes downside protection an important part of assessing a target date fund over a full retirement horizon, particularly as members get closer to the point when they have less time to recover from a significant decline.
What to look at
In comparing target date funds, Larochelle believes advisors have to spend more time understanding what’s underneath.
He starts with the glide path because it determines how risk changes over a member’s lifetime. From there, he looks at the assumptions behind the strategy. How much risk does it take approaching retirement? Does it incorporate alternatives? How often is the portfolio reviewed? Those design decisions, he argues, often explain differences that performance tables alone cannot.
Those aren’t the questions that tend to get asked first, because “Performance is visible,” Larochelle says. “It’s easy to measure and compare.”
Beyond traditional stocks and bonds, Progression includes alternative assets such as private credit, infrastructure, real estate, and timberland alongside Canadian, US, and international equities and fixed income. Larochelle argues those additional sources of return aren’t there simply for variety. They’re intended to improve diversification and help manage risk across different market environments.
Beyond the portfolio's asset mix and glide path Larochelle says advisors should also consider the governance process behind a target date fund. That can be harder to assess from a performance table because it involves how the strategy is managed over time, including the process for selecting and monitoring investment managers, reviewing the glide path and assessing whether changes to the underlying portfolio are warranted.
One mistake he sees is evaluating target date funds primarily through short-term returns or fee differences.
“Target date funds are long-term solutions,” he says. “It is important to consider other elements than simply recent returns and fee differentials.”
He also cautions against assuming that funds sharing the same retirement date are largely interchangeable.
On the surface, two 2045 funds may appear similar. Underneath, they may reflect very different assumptions about risk, diversification, and what plan members need as they move from accumulation into retirement.
“Target date funds are long-term solutions. It is important to consider other elements than simply recent returns and fee differentials”
Designed for group plans, not adapted from retail
One of the decisions Desjardins Insurance made early on was to build Progression specifically for group retirement plans rather than adapt an existing investment strategy. It’s an important distinction for Larochelle, because the fund has to reflect how plan members actually use workplace plans.
“Group retirement plans have very different dynamics,” he says. “Automatic contributions, limited decision-making by plan members, compared to individual plans.”
“Progression has an important role to play,” Larochelle says, which includes “managing risk, adjusting over time, and supporting retirement income needs, without requiring constant intervention from the plan member.”
That thinking also shapes the glide path. Progression remains mostly invested in equities when retirement is decades away, then gradually reduces equity exposure as plan members approach retirement. At the target date, about 40 percent of the portfolio remains invested in equities.
This is a deliberate balance. Plan members still need growth after they stop working because retirement can last decades, but they also become more exposed to market declines once they begin drawing income.
“Retirement doesn’t end at the target date,” he says. “It’s actually when the need for risk management becomes even more critical.”
He’d rather not think of the target date as a finish line at all. The strategy is meant to hold up on both sides of it, and while the glide path itself stays put after retirement, the underlying portfolio gets reviewed regularly as conditions change.
Published Aug 24, 2026
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Why group plans require a different approach
Target date funds designed for workplace retirement plans should reflect how members actually invest:
Charles-Antoine Larochelle, Desjardins Insurance
Built for the long term, easier to compare
One advantage of managing the strategy in-house, Larochelle says, is the ability to refine it as retirement itself changes.
Longer life expectancies, for example, prompted Desjardins Insurance to revisit the glide path several years ago. Rather than only making the portfolio more aggressive in retirement, the firm increased exposure to growth assets throughout the plan members’ working years − especially at the beginning, when they have more time to recover from market downturns.
“It’s about balancing the trade-off between risk and return throughout the glide path,” Larochelle says, “while maintaining efficient exposure to growth assets.”
The current unitized-fund structure only launched this year, but the underlying approach carries about a decade of performance history from its previous structure, including the pandemic and the volatility that trailed it. That, Larochelle says, gives advisors a chance to look past raw returns and see how the portfolios actually behaved next to similar strategies.
Making that kind of comparison easier was the whole reason for the switch to a unit-value structure. Advisors and plan sponsors no longer have to evaluate Progression through a proprietary format; they can size it up against other target date funds on a like-for-like basis.
Which is roughly where Larochelle’s own thinking lands. There’s no shortage of target date funds to pick from now, and as the category has grown more sophisticated, how a strategy handles risk over the long haul has come to matter at least as much as its performance or its price.
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Automatic contributions support disciplined, long-term investing.
Based on our observations, default investing means many members remain in the same strategy throughout their careers.
Institutional oversight helps ensure the portfolio continues to evolve as markets and retirement needs change.
regular reviews of the glide path to reflect changing market conditions and retirement trends
ongoing due diligence on underlying investment managers
multi-level oversight to keep portfolios aligned with long-term retirement objectives
a disciplined investment process that emphasizes consistency over reacting to short-term market movements
Strong governance goes beyond selecting investments. It includes:
The role of governance in TDFs
Note:
1 Morningstar (2026, April 17). Canadian Target-Date Funds: Trends, Performance, Market Leaders.
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