Target Date Fund Model

The model's core driver is the glide path, which sets annual asset-class allocations for domestic equity, international equity, fixed income, TIPS, and cash. These weights must sum to 100% each year and follow a smooth curve from launch through retirement to a post-retirement level.

• Two glide types are supported: a 'to' path that holds equity flat after retirement, and a 'through' path that continues reducing equity for a decade. AUM builds from seed capital plus net new flows, which grow at a specified rate but saturate at a plateau cap to keep the vintage within scale.
• After retirement, flows turn negative as redemptions ramp linearly over ten years. Revenue is driven by average AUM multiplied by an effective fee rate that declines annually due to fee compression, floored at 10 basis points.

The model computes AUM year by year: opening AUM plus net flows plus market return minus rebalancing drag. Market return uses the year's glide-path allocation multiplied by each asset-class return.

• Average AUM, the average of opening and closing balances, drives management fee revenue and various cost lines. Net revenue equals net management fees after underlying fund costs, plus sub-advisory and securities lending income.
• Operating expenses include fixed and variable costs, with PM team, operations, compliance, and technology treated as attributable shares of the manager's cost base. EBITDA is net revenue minus operating expenses.

After depreciation, interest on the revolver, and tax, the model produces net income. A revolver sweep resolves cash timing gaps: it draws when pre-financing cash would go negative and repays when cash is positive, ensuring closing cash never falls below zero.

The model generates a full set of financial statements: income statement, cash flow, and balance sheet, plus a returns sheet with fund and manager economics. Fund-level outputs include gross and net fund returns, while manager-level metrics cover EBITDA margin, FCF margin, net margin, ROE, and a KPI summary with AUM CAGR, final-year AUM, and breakeven year.

• A checks sheet validates glide path sums, AUM walk reconciliation, balance sheet balancing, revenue cross-checks, and retained earnings roll-forward. The model also flags common errors like glide paths not summing to 100%, off-by-one allocation errors, double-counted underlying fund costs, and dividends paid out of an accumulated deficit.
• These checks help ensure the model's integrity without requiring manual inspection of every formula.

This model is built for asset managers or analysts assessing whether to launch a mid-tier target-date fund vintage. It helps answer questions about breakeven timing, fee compression impact, and capital needs.

• By inputting assumptions for initial AUM, flow growth, fee rates, and glide path, users can see how the fund's profitability evolves. The model includes a revolver facility to manage cash timing, with interest charged on the opening balance.
• Dividends are paid only after the accumulated deficit clears, capped at 60% of net income. The public download is a values-only preview; it does not contain live formulas or automatically recalculate.

The underlying model captures the relationships described here.