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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Andrei Simonov, Ph.D.
Chairperson, Department of Finance, Philip J. May Endowed Professor of Finance, Michigan State University

Andrei Simonov is  Professor of Finance and Chairperson of Finance Department at Michigan State University. He received a Ph.D. in Finance from the European Institute of Business Administration (INSEAD, 2000). He also holds a Ph.D. in Theoretical Physics from Moscow State University. His research interests include asset pricing, individual portfolio decision, investment banking, mutual funds and behavioral finance.