Much-touted target-date funds have been coming in for some harsh criticism, thanks to their bundled approach and wild variations in how they're structured.
Nearly 90 percent of direct contribution plans use TDFs as their default investment option. But did you know, for example, that while the average 2030 TDF is made up of 70 percent in equities, others have just 20 percent?
As a consequence, some participants are exposed to more risk than they're aware of, while others might be under-exposed. In other words, the very act of bundling limits the effectiveness of TDFs in answering the needs of the age group to which they're targeted.
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