Investing in Funds: A Monthly Analysis: Investing For Retirement --- Year-2010 Funds Recover: They got clobbered in 2008, but these target-date funds bounced back strongly
Target-date funds, which suffered a black eye in the market crash, are looking better these days.</br></br>During the bear market of 2007-09, target-date funds designed for investors retiring in 2010 lost about 37% on average, according to Morningstar Inc., blindsiding some soon-to-be-retirees. These funds were taken to task by government officials, lawmakers and investors for what some said were overly aggressive allocations to stocks and for failing to clearly explain their strategies and risks.</br></br>"Some investors didn't realize they could lose money," says Robyn Credico, a senior consultant at employee-benefit consulting firm Towers Watson.</br></br>The stock market's rebound from its early-2009 low has propelled most of these funds back into positive territory, even for some investors who bought at the market's 2007 high, prompting some in the industry to say concerns about the funds' asset allocations were overdone.</br></br>Despite the improved performance and the fact that some fund providers have taken steps to reduce volatility in their portfolios, some industry watchers say target-date products may still be too risky for those in or near retirement.