Monday, January 12, 2009

Target Date Mutual Funds Riskier Than Thought

Poor performance this year of Target Date Mutual Funds has left many investors asking questions about their holdings. Target date funds - also known as a lifecycle or age-based funds - are designed to take decision making out of an investor's hands when it comes to figuring out how to invest for retirement. The idea is you simply put your money into a single fund linked to the approximate year in which you plan to retire. Fund companies say they'll do the rest. The funds are supposed become more conservative as the target date approaches. But many with a target date of 2010 (less than a year away) have been reeling in the market with losses ranging from 15 percent to more than 40 percent to date, according to Barbara Whelehan. Click here for full article. Some funds may have had exposure to high risk bond holdings, CMBS, Swaps and toxic derivatives. According to SmartMoney, Target-date funds are trickier to evaluate than standard mutual funds, carry unique risks, and their lack of transparency is a big problem.

Investors holding funds with a date of 2010 or 2015 with large losses should feel free to contact Sparer Law Group to discuss their investment holdings.


Seenath Kumar said...

Yes their was lot of distraction with funds but Mutual Fund was not that much effected as stocks.

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