SumDay
Thinks s/he gets paid by the post
- Joined
- Aug 9, 2012
- Messages
- 1,862
'Target' Funds Vulnerable to Rate Rise - Yahoo! Finance
Now I'm worried we have too much in target funds....
Take the $19 billion Vanguard Target Retirement 2015 fund. It held 42% of its assets in bonds as of the most-recent date for which Vanguard reported its holdings, according to data from Morningstar, which counts bonds maturing in a year or more. If interest rates jump by one percentage point, the fund's bonds would drop 5.4% in value, based on the fund's duration of 5.4 years as of the end of 2012. For an investor with $500,000 in the fund, that would translate to a loss of more than $11,000 in the bond portion.
Now I'm worried we have too much in target funds....