The Senate Special Committee on Aging held a hearing Wednesday to examine the risks and potential conflicts of interest inherent in target-date funds.

For 401(k) administrators that offer their own target-date funds, comprised of their own offerings, in plans that automatically enroll workers, “it’s the easiest money to get and the hardest money to lose,” testified John Rekenthaler, vice president of research at Morningstar.

Last year, even as investors redeemed money from nearly every mutual fund category, target-date funds reaped $57 billion in inflows, and they are on pace to attract another $60 billion this year. Nearly 86% of the assets in target-date funds are held in retirement plans.

Because the glidepaths and risk allotment of target-date funds vary so greatly, even for funds with the same retirement target, their performance is all over the map, experts testified. With equity exposure ranging from 26% to 72% in the 2010 target-date group, for instance, those funds lost anywhere between 23% and 38% last year, according to Morningstar.

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