Target-Date Retirement Funds: Watch Out for the Flaws

You've heard about target maturity funds. But is it a good idea to jump into them?

Several traditional mutual fund companies like T. Rowe Price have created them in the last few years, as have other big fund companies like Vanguard, Franklin Resources (BEN Quote) and Charles Schwab (SCHW Quote).

Recently TD Ameritrade created a target-date family with five products under the name TDAX Independence Exchange Traded Funds.

The concept is straightforward: An investor buys the fund that comes closest to maturing at his intended retirement date. As the fund moves closer to maturity, it automatically reduces equity exposure in favor of fixed income exposure per a predetermined schedule. ...