Target-date funds recently got government approval as the default option in 401(k) plans. On the other hand, a recent study by Compass Investors, finds fault with the structure of these funds. A recent study from the Compass Institute, a think tank affiliated with Compass Investors, criticizes the structure of target-date funds. It advocates shifting asset allocations based on market and other trends, instead of on a fixed schedule.

While critics say target-date funds are a better long-term investment than money-market funds -- the former default option when workers didn't specify a choice -- some say investors would fare better taking an active role.

The funds, which gradually shift out of stocks and into bonds to reduce risk, have mushroomed from 23 funds with $8 billion in 2000, to more than 250 with $160 billion under management, writes Andrew Clark, head of research for Lipper

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