A different kind of target-date investor

January 30, 2017

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Roughly one-third of plan participants who are in target-date funds at Vanguard are "mixed" target-date investors. In other words, they combine a target-date fund with other plan investment options. There are concerns that mixed target-date investors are misusing what are meant to be all-in-one funds and take on added risk in their portfolios through overlapping securities and unintended concentration in certain sectors.

In A different kind of target-date investor, from Vanguard Center for Investor Research, authors Cynthia Pagliaro and Stephen Utkus examine how participants become mixed target-date investors, determine if the concerns raised about mixed target-date investors are valid, and suggest measures to avoid such risks.

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  • All investing is subject to risk, including the possible loss of the money you invest.
  • Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date.