Is TargetReturn For Me? | Convergence | FAQs

CONVERGENCE

In a TargetReturn account, the return in any given year may vary considerably from the long-term target. Over a reasonable time frame, however, we expect short-term returns to be roughly evenly divided between periods of outperformance and underperformance relative to the target. We therefore expect the average annual return to converge toward the target over time, as seen in the narrowing bars of the chart below.

The chart illustrates that as the time horizon extends, and the “sample size” increases, the likely range of average annual return narrows. We call this phenomenon convergence.

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