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Special Report: Fidelity puts 6 million savers on risky path to retirement. 12 Minute Read

By Feux Follets following x   2018 Mar 5, 10:53am 665 views   7 comments   watch   sfw   quote     share    


For three years, the mutual funds in Fidelity’s flagship retirement franchise have outperformed at least 85 percent of their competitors, reversing a decade-long trend of subpar performance.

And yet client money has continued to flow out of the firm’s Freedom Funds as retirement plan sponsors shift workers’ savings to rivals in the target-date fund business.

While deposits in the trillion-dollar sector have surged, Fidelity has seen nearly $16 billion in net withdrawals over the past four years, according to research firm Morningstar Inc.

The exodus stems in part from unease with the way Boston-based Fidelity has boosted performance - by ramping up risk.

Since a strategy overhaul that took full effect in 2014, Fidelity has substantially increased exposure to stocks, including those from volatile emerging markets. The firm also scrapped a long-held belief of sticking to pre-set allocations of stocks, bonds and other assets in target-date funds.

Instead, Fidelity portfolio managers now try to time market shifts, for instance by moving billions of dollars out of money-losing commodities bets and into Chinese stocks and U.S. tech shares, regulatory filings show.

Such changes have worked well in the second-longest running bull market in U.S. history, but they expose investors to bigger losses if the funds’ increasingly volatile assets head south.

In the 1990s, Fidelity helped pioneer target-date funds as a prudent method to diversify investments and automatically dial down risk as participants age. The fund names typically include a projected retirement year - the target date.

Today, many target-date fund managers have turned to riskier investments to boost returns, and Fidelity has gone further than its peers, said Ron Surz, president of research firm Target Date Solutions.

“These funds with high concentrations in stocks are a time bomb,” Surz said.

The sector is even riskier today than during the 2008 financial crisis, when some funds dropped more than 40 percent, he said.

More: https://www.reuters.com/article/us-funds-fidelity-retirement-special-rep/special-report-fidelity-puts-6-million-savers-on-risky-path-to-retirement-idUSKBN1GH1SI

Related Article: Fidelity’s Funds Are Up, And So Are Its Problems

https://www.barrons.com/articles/fidelitys-funds-are-up-and-so-are-its-problems-1520043296

#Investing #Retirement #Fidelity


1   zzyzzx   ignore (1)   2018 Mar 5, 12:09pm   ↑ like (1)   ↓ dislike (0)   quote        

Fuck Fidelity!!!
2   BayArea   ignore (0)   2018 Mar 5, 1:09pm   ↑ like (1)   ↓ dislike (0)   quote        

Interesting article, thanks for sharing.

I wonder how Fidelity will respond.
3   Sniper   ignore (11)   2018 Mar 5, 2:17pm   ↑ like (0)   ↓ dislike (0)   quote        

zzyzzx says
Fuck Fidelity!!!


Careful there, they are holding a chunk of my money.

Feux Follets says
And yet client money has continued to flow out of the firm’s Freedom Funds as retirement plan sponsors shift workers’ savings to rivals in the target-date fund business.

While deposits in the trillion-dollar sector have surged, Fidelity has seen nearly $16 billion in net withdrawals over the past four years, according to research firm Morningstar Inc


I believe that happened for a few reasons. First, the market overall moved sideways between 2014 and 2016 and people weren't happy with their returns in their 401k's. So they went searching....

Second, people are moving from passively managed funds to more active managed funds. Traditional 401K's usually don't offer a lot of choices. So people have moved into ETFs to try and gain higher returns, the flows into ETFs the last few years has been YYuuGGeee.

Feux Follets says
“These funds with high concentrations in stocks are a time bomb,” Surz said.


ANY funds with high concentrations in stocks today are a time bomb. Not just the ones in the article. We are way past due for a major correction.

From the article link:

The funds, he said, are so popular in part because investors believe they are designed to “not lose money.”

That's the problem, "believe"......... "perception is reality" with people believing "stocks only go up", just like house prices only go up.

BayArea says
I wonder how Fidelity will respond.


I think the article was a hit piece. The guys I deal with at Fidelity are way better than the ones I deal with at Vanguard, Wells Fargo, Morgan Stanley and a few others. In fact, they've been a little bit more conservative when I was looking to be aggressive.
4   APOCALYPSEFUCKisShostikovitch   ignore (30)   2018 Mar 5, 2:28pm   ↑ like (0)   ↓ dislike (0)   quote        

Fidelity needs to hand over these funds to a guy from Kazakhstan who Trump trusts.
5   Sniper   ignore (11)   2018 Mar 5, 3:10pm   ↑ like (2)   ↓ dislike (1)   quote        

Sniper says
BayArea says
I wonder how Fidelity will respond.


I think the article was a hit piece.


I was right.

The author of that article in the OP has a major hard-on for Fidelity. He has multiple hit pieces in his bio. Plus, he's a gun hater and a Trump hater living in Mass. Want to take a guess which "tribe" he's on? He also use to write for the HuffPost.
6   Feux Follets   ignore (0)   2018 Mar 5, 11:24pm   ↑ like (0)   ↓ dislike (0)   quote        

A hater - say it isn't so, from the left, OMFG....tribe member as well....from Massachusetts, home of the Kennedys...all hope is lost.

Investors can be rather naïve and will hear what they want to hear. It's one thing to hear and another to listen.

Another thing to remember, like anyone else who works on commission you are dealing with a built in conflict of interest. Their commission against your best interests, they do not often dwell in the same house.

In office visits with Fidelity have always left me lacking however calls into the office in Salt Lake City office have always proved very helpful and beneficial.

They also hold a chunk of my funds just like others.
7   zzyzzx   ignore (1)   2018 Mar 6, 7:16am   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says
zzyzzx says
Fuck Fidelity!!!


Careful there, they are holding a chunk of my money.


I just jizzed all over your 401K....

Seriously, I have then through an employer and they blow chunks. They might be OK if it were not an employer sponsored account.




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