Target Date Funds Will Feel Interest Rate Pain
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Thursday, April 25, 2013

Target Date Funds Will Feel Interest Rate Pain

Fear of the possibility of rising interest rates is now being connected to the most popular default investment inside 401(k) plans: target date funds.

Joe Light and Liam Pleven in the Wall Street Journal report that, like other fixed income mutual funds or other asset allocation products that invest in bonds, rising interest rates could pummel target date funds.

The article offers input from several folks, including: Dave Scott, chief investment officer of Sunrise Advisors in Leawood, Kansas; Fran Kinniry, who helps oversee Vanguard's [profile] target date funds, the second largest target date fund family in the industry; a participant who is a 55-year-old computer programmer; Jerome Clark, PM for T. Rowe Price's [profile] target date funds, the third largest target date fund family; and Marc Fandetti, principal at Meketa Investment Group in Westwood, Massachusetts.

Michael Aneiro of Barron's picked up on the WSJ report.

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