28 February 2011

High fees hamper traget-date funds

The importance of keeping a close watch on fees that are paid for investment advice is illustrated by the latest controversy about the idea of so-called 'target date' funds. These funds invest in a mix of stocks and bonds that grows steadily more conservative as investors' retirement—or "target"—date approaches. But while this structure is supposed to help investors saving for their retirement it creates additional pitfalls on the already stony road to build a retirement pot that is sufficiently large to cover the needs of a rapidly-aging population.