Fidelity Investments is the undisputed king of 401(k) plans, but its lineup of retirement-orientated mutual funds conspicuously lags lifestyle funds offered by competitors like T. R. Price and Vanguard, according to a new Morningstar "Fund Spy" column. Lifestyle funds gradually dial down aggressive portfolio components as the years draw closer to retirement dates like 2040.

Fidelity offers its own variation on lifestyle funds-of-funds, the Fidelity Freedom lineup, but Morningstar says they are hamstrung by a noticeable overlap in underlying investments. Vanguard and T. Rowe are more successful in offering diversified retirement-date investments with less overlap in portfolio holdings, according to "Fund Spy." For example, the Freedom Fund 2020 is a composite of 18 separate proprietary funds, including three large-cap blend funds, three large-cap growth funds and one large-cap value fund. Mornginstar also cites additional overlap in fixed-income holdings of the Fidelity Investment-Grade Bond and the Fidelity Intermediate Bond funds, which are also found in the Freedom 2020 portfolio.

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