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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: target funds, new bonds etfs Date: 7/11/2014 11:12 PM
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The second is how conservative the fund will be at the target.

Still there is a paradox on target funds. If you own bond funds at the wrong time, you can be in for some sizable losses. But people want bonds in their target funds to reduce volatility and reduce risk when they need the funds.

Do owners of Target funds realize they own bonds when interest rates are likely to rise? Are they comfortable with the risk?

Conservative fund = fund that switches to short maturity bonds at the right time. That does mean reduced return. They have to do it right.

But this is standard bond portfolio risk. Is the public well informed and comfortable? Do they know what they are doing? Can they trust their advisers? If they get hurt with bond holdings will they be surprised? Upset? Feel cheated? Or did they know the risk and take it willingly?
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