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| I review my investments in hopes of being diverse. |
This has been a red letter week for Rose Rounds - first a mention in "Ikea Hackers" and now an interview with the Wall Street Journal.
When I returned home from work Wednesday husband told me that I had a message on the home phone from the Wall Street Journal. It was a reporter, calling from the Wall Street Journal wanting to ask me about a comment I'd made in 2010 to the SEC regarding Target Date Investment funds.
Despite the needle in a haystack quality of someone wanting to know something about an on-line comment I made in 2010 I was ble to dredge up what I had commented upon. Target Date investment funds, with names like "Lifecycle 2025" are mutual fund-like products that invest 401(k) contributions in a mix of investments -stocks, bonds, - that's designed to grow your money over time, without subjecting the investor to excessive risk given their years left to retirement. If I'm projected to reach retirement in 2025 then as 2025 draws near the fund would find itself in investments that would have the proper risk mix for someone in the early stages of retirement. Someone close to retirement may prefer to trade lower returns for a portfolio that won't vary greatly in value, while a young person, who won't need the money soon and needs high grow might prefer risker risk and more variance in their portfolio.
After the crash of 2008, these types of funds came under scrutiny because many of them, even those for folks quite close to retirement, took big hits in their values - not exactly what they were advertised to do! The SEC held hearings about the information investors received about the funds and the amount of disclosure they need to provide investors. A financial columnist in the Washington Post carried a story about this and invited readers to submit their thoughts about the funds to the SEC for their consideration. That’s where I got involved. I just hate to pass up a comment opportunity!
My employer offers a Lifecycle fund option and I put some money into it. Fidelity Investments supplies the web portal I use to look at the funds as well as a tool to help investors manage their money properly. I use the automated tool to review my portfolio and plan my contributions several times a year.
The problem I had with the automated tool was that the money in the Lifecycle funds was shown as a blob so I couldn’t tell how much was in stocks, bonds, money-market cash and the like. If you remember, in 2008 all kinds of financial investments went bad and it became important to me to know what I was invested in. So, given the chance I made this comment:
Subject: File No. S7-12-10
From: MY NAME!
Affiliation: Computer Programmer - not associated with investment industry
From: MY NAME!
Affiliation: Computer Programmer - not associated with investment industry
July 8, 2010
"Should we
specify the particular categories of investments for which allocations must be
shown and how these categories should be defined?"
I was able to get the general allocation from my fund, but would
like to have more detail. Are the fixed income investments in municipal bonds,
foreign governments, what's their rating? (hopefully my retirement account,
being tax deferred isn't in municipals, but I can't find that out) What sector
are the equities in? How can I know if I'm exposed to a big risk if I don't get
this information?
When I use Fidelity's online tools the portion of my 401(k) in
the life cycle fund comes up as "unknown." If the tool is to be
useful to me then the life cycle fund should send the meta data to such tools.
A range of investment holdings is fine with me because I think
they should have leeway to get in and out of the market, but I would like more
detail about the actual holdings to come through so I can better assess my own
portfolio and balance it across all my investments.
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| In 2013 my Asset Classes are shown accurately, the 2010 they were not. |
After discussing this with the reporter I found my actual comment on the SEC web site. I thought it was decent! Since then Fidelity has improved their tool, these days
my allocations show up properly, but in 2010 they didn't.
I wonder whether they read my comment?
I wonder whether they read my comment?
It was interesting to talk with the reporter. He asked me some questions about my fund, and I wasn't happy with my answers so that set me to looking a bit more at them. I don’t know if he'll use anything I said in the article. I hope I don’t end up as a poster child for idiotic investors or in trouble with my employer for having mentioned their name in our discussion – I want to retire, not be fired!
There were maybe 30-40 comments and only a handful were from
non-investment industry sources. Of the
non-investment industry sources several were of the tin-foil hat and little
green men variety. All in all I thought
mine was pretty genuine!
The SEC has an informative investor web site, with this link
to explain about target date funds.
Although we subscribe to several financial publications, the Wall Street Journal is not one of them. While I'm interested in financial and investing news their politics are a little conservative, even for me. If you do, and you see anything about Lifecycle/Target date funds - let me know!
Do you ever re-read comments you've made on-line and wonder what you'd been thinking when you made them?
Do you ever re-read comments you've made on-line and wonder what you'd been thinking when you made them?
