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Shorter WSJ: Beware Target Date Funds

Posted By Barry Ritholtz On June 17, 2013 @ 12:00 pm In 401(k),Investing,Mutual Funds | Comments Disabled

Missing the Target
Graphic [1]
Source: WSJ [2]

 

You may have missed the WSJ’s takedown on Target-date funds this weekend. Its a must.

The idea of target date funds are a form of auto-pilot that automatically shifts allocations into more bonds less stocks as the investor ages. Target date funds now manage about $550 billion dollars.

The problem with these funds — aside from high fees and higher-costs — is how out of phase its been with the markets for retiring babyboomers. Many of them have found they are selling equities into weakness and buying bonds into a 30 year bull market which is looking kinda old and shaky.

Anyone with a 401k or who uses these funds should definitely give the article a read.

 

 
Source:
Missing the Target [2]
LIAM PLEVEN and JOE LIGHT
WSJ, June 14, 2013
http://online.wsj.com/article/SB10001424127887324049504578541831083543670.html


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[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/06/target.jpg

[2] WSJ: http://online.wsj.com/article/SB10001424127887324049504578541831083543670.html

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