Roughly one-third of plan participants who are in target-date funds at Vanguard are "mixed" target-date investors. In other words, they combine a target-date fund with other plan investment options. There are concerns that mixed target-date investors are misusing what are meant to be all-in-one funds and take on added risk in their portfolios through overlapping securities and unintended concentration in certain sectors.
In A different kind of target-date investor, from Vanguard Center for Investor Research, authors Cynthia Pagliaro and Stephen Utkus examine how participants become mixed target-date investors, determine if the concerns raised about mixed target-date investors are valid, and suggest measures to avoid such risks.
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