The Disturbing Conflicts of Interest in Target Date Funds

Are you one of the 40 million folks who has a target date fund in your 401(k)? It could be costing you 21% in returns over the course of your career, according to a study by three professors from INSEAD, Villanova University and Michigan State.

A young woman grimaces.
(Image credit: Getty Images)

The Pension Protection Act of 2006 single-handedly created target date funds as a global asset class, one which now commands a 20% to 25% share among public and corporate pension plans. In the United States, more than $2.5 trillion is invested in these types of funds by approximately 40 million people.

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Massimo Massa, Professor of Finance
Rothschild Chaired Professor of Banking, INSEAD

Massimo Massa is the Rothschild Chaired Professor of Banking and a Professor of Finance at INSEAD. Massa's research interests include asset management, corporate finance, behavioural finance and financial intermediation. He has an MBA from the Yale School of Management and an MA and a Ph.D. in Financial Economics from Yale.