Word: portfolios
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Dates: during 2000-2009
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Rips believed that his father was the epitome of all things placidly, plainly Midwestern: "Born in Nebraska, he was Republican, affluent and content." But after Rips' father died, a loose thread appeared: a portfolio of paintings of a naked black woman. Nobody knew who the woman was or anything about the nature of her relationship to the family patriarch. Rips began tugging at the thread, and before long the whole gray flannel suit unraveled...
However appealing, though, these funds do have their pitfalls. Typically, a life-cycle portfolio invests in a mix of other funds, delivering risk-reducing diversification--but also a chance for an added layer of fees. You will want to stick with funds firms (like T. Rowe Price and Vanguard) that charge only the underlying funds' expense ratios or a modest amount on top. (Fidelity, for example, charges an extra 0.08%.) Some firms charge far more...
Another warning: each fund has its own one-size-fits-all mentality--and that size might not be yours. The American Century My Retirement 2025 Portfolio, for example, aims this year to have 67% in stocks, 28% in bonds and 5% in a money market. Yet Vanguard Target Retirement 2025--pursuing the identical goal--holds a 59% stock, 41% bond split...
Finally, life-cycle funds are meant to be all-in-one portfolios, yet a survey of retirement savers by Hewitt Associates found that people who invest in them held an average of six different funds in their 401(k)s. That not only undercuts the great advantage of those vehicles--ease of use--but it can also put your overall portfolio allocation out of whack, morphing you into a middle-of-the-road investor when an aggressive or conservative allocation might better suit your time frame. "Employees think this is another fund," says David Wray, president of the Profit Sharing...
Beefing up the FDA's safety portfolio or farming it out to another agency are two ways to address that kind of failure. Another would be for manufacturers to design their drug trials so that more attention is paid to the effects on all patients who take them, not just the relatively healthy ones usually used in their studies. A fourth would be to force drug companies to publish all their clinical data, not just the data that show their product in the best light. Editors at several prominent research journals are calling for measures that would do just that...