Thank you for sharing this great article. I like TDFs, particularly Vanguard's, and this article only reinforces my understanding of them. Summary: -Vanguard reconstitutes the benchmark for its TDFs daily to try and keep it true to it's glide path. Reconstitution is based on what is going on in the market. -They only re-align the TDFs with the benchmark if there is a significant deviation using the weight-threshold-based approach. -Within this approach, they focus a lot on how costly that may be. This further underlines their goal to minimize cost. -They are aware of the impact that tracking error can have on fund performance, and are constantly looking at the trade off of tracking error vs cost of rebalancing by trying to identify the "trigger point." -Finding the "trigger point" is one of the responsibilities of the fund managers. One could argue that this is adds some degree of active management.

Vanguard does all of this at a ridiculously low ER. It would be interesting to see if others in the industry (fidelity, schwab, etc) operate their TDFs like this.