Diversification in the US is inadequate because most TDFs are predominately US stocks and bonds. The current trend is toward lower fees but low fees equate to low diversification since diversifying assets command a high price, namely commodities, real estate, natural resources, foreign stocks and bonds, etc.

Similarly, TDFs are too risky. We learned this lesson in 2008 when the typical 2010 fund lost 25%. Nothing has changed since 2008 so the vulnerable remain exposed to large losses as they near retirement, which is shocking. It's a mistake just waiting to happen (again).

Australia can indeed learn from the mistakes of the US.

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