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Bogle: Unclear if Target-Date Funds Have Lived Up to Promise

Target-date funds are a great fundamental idea, but confusion over asset allocation and investment choices dilutes the benefit to the average investor, says Vanguard founder Jack Bogle.

Christine Benz: I'd like to discuss whether you think there have been any beneficial investing innovations, maybe talk about target-date funds in particular as being something that at least on the surface appears to be something setup to address a real investor need?

John Bogle: Well, most innovations in the financial field are innovations of benefit for the innovators. They benefit the creators of them, the marketers of them. Wall Street benefits from most innovations and investors do not. So, when I think about investors, this is going to be a little bit self-serving, partially of the innovations in the mutual fund industry, let's say for a minute. Certainly the money market fund is one. Although where the money market fund stands today with yields that you can barely find a tenth of 1% is probably what the yield in the money market fund is. That was an innovation.