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The Short Answer

Is My Target-Date Fund Layering On Extra Fees?

Some funds that invest in other funds charge additional fees, and here's how you can tell.

Mentioned:

Question: I've heard that some target-date funds layer on additional management fees above what the underlying fund holdings charge. Can you clarify if and when this is done?

Answer: The growing popularity of target-date funds has been among the biggest stories in the retirement-planning industry over the past decade. From 2005 to the first quarter of 2014, net assets in target-date funds grew from less than $100 billion to more than $650 billion. Those numbers received a major boost by passage of the Pension Protection Act of 2006, which allows employers to default their workers into their retirement plans' target-date funds unless the worker chooses a different investment option or not to participate in the plan.

Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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