Target date funds benefited from a healthy stock market as well as respectable bond yields last year, but they still have yet to erase the losses of 2008, according to the Wall Street Journal.

The publication notes that the products are structured to protect investors by reducing exposure to stocks and increasing bond holdings as people get closer to retirement, or their "target" year. For 2012, the average fund with a 2015 target date increased 10.6 percent, according to Morningstar Inc.. That trails the Standard & Poor's 500-stock index, which rose 16 percent, but is well above the Barclays Capital Aggregate Bond Index's gain of 4 percent.

However, while the performance for these funds has been generally positive since the financial crisis, the average 2015 fund was up just 2% a year over the past five. Given that most financial-planning models assume annual returns of 6% at a minimum, that shortfall can pose a significant problem for savers who rely on the funds, according to the WSJ.  

Edited by: Tommy Fernandez


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