The vast majority of target-date funds designed for investors with a 10-to-20-year investment horizon hold "radical levels of public equity exposure," according to one fiduciary consultant to defined contribution plans.
Marc Fandetti, the defined contribution practice leader at Meketa Investment Group, a Boston-based consultancy to retirement plans, thinks that is putting too many participants in a bad spot.
"As a result of extreme equity exposure, the largest TDFs provide little downside protection to investors," wrote Fandetti in a recent paper. TDFs effectively behave like 100 percent equity investments, he said.
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