Always check a new 401k fund ASAP!

Earlier this year I received a note saying the Core Bond Fund in my 401k was changing to a new bond fund this year. They nicely transferred the old holdings to the new fund without any cause for action on my part.

The return looked impressive: ~4.5% vs. ~1.6%. Both were int. term (2.5-5 yrs duration).

They finally got around to posting the new fund's top 10 holdings and per cent asset categories. The new fund is almost 37% invested in mortgage securities. The old was only a tad over 1%.

So I moved my holdings to a money market fund from the new bond fund today. Imagine my surprise when the value of the fund had dropped almost 13% from Friday to today!

The HR analysts were chasing yields without a thought as to risk<sigh>. I wonder how many will even realize what is happening...