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Investing Specialists

Are Vanguard's Target Retirement Funds on Target?

A chat with one of the architects of Vanguard's Target Retirement Funds.


Target-retirement funds have been in investors' cross hairs recently.

Many of the funds that have been designed to be all-in-one funds for investors with no appetite or aptitude for building and monitoring retirement portfolios have suffered staggering losses in the bear market. Some target-date funds, so called because their allocations to stocks, bonds, and other asset classes get more conservative as they approach a predetermined year, have shed as much as half of their values in the past year.

This wasn't what many target-date investors expected. They were told these were one-decision funds that would ferry their nest eggs through the financial markets' shoals to the shores of retirement and beyond. Many target-date funds have left investors, including some in or near their golden years, underwater and wondering what happened.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.