Do Target Date Funds Have More Risk Than People Think? | Historically Bad Year for Bonds

This week Derek Moore notes the historic start to the year in bonds given the rise in interest rates and how low they were at the beginning of this cycle. Then Derek discusses target date funds. Popular in 401k plans, many investors don’t fully understand what they are and the different types of risks inherent in them.

Historic first half drawdown in the US Aggregate Bond Index

What are target date funds?

What is the glide path for target date funds?

What the intent of target date funds is

Why investors might believe they have less risk than they do

The 2008-09 experience for investors in target date funds

Post Great Financial Crisis hearings on target date funds

How target date funds with same date experienced so variation in returns

Examining some near-term retirement date funds

Chapter 2 from the book Broken Pie Chart and target date funds

Mentioned in this Episode:

Contact Derek Moore derek.moore@zegafinancial.com

ZEGA Financial www.zegafinancial.com

Public hearings 2009 on retirement target date funds https://www.sec.gov/spotlight/targetdatefunds/targetdatefunds061809.pdf