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large cap bias in target date funding

Started by piarluozno, November 13, 2018, 12:05:45 AM

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Hi folks,
I finally signed up to PC and got a call from the advisor. We had two rounds of meetings - one informatory and the second one focusing on their analysis of my current portfolio. The advisor was a nice gentleman but neither his past work credentials nor his presentation gave me much confidence about their advisory service. Hence, I passed on their offer but decided to keep using the tool as it is quite functional and user friendly.
Anyways, the main reason I am writing this post is that he bad mouthed target date funding, which hold majority of our 401k savings. In particular he kept insisting on that target retirement funds are highly biased towards large cap firms and hence are destined to perform (relatively) worse. I could not find an evidence for this claim. I would understand for example that an sp500 index fund would be biased for large cap by definition, but is it in general true that vanguard's target 20XY funds are biased for large cap firms? What other, if any biases, are associated with target funds?


He's a call center adviser.  I would trust the judgment of Vanguard and how they manage their target date funds much more than a high volume phone adviser who probably answered a craigslist ad for the job.  I also trust the judgment of someone like Warren Buffett who consistently praises the simplicity of buying and holding Vanguard funds, and avoiding adviser fees like the plague.

Not only that, the adviser is just flat out wrong.  Looking at my Target date Vanguard fund (2045) - 54% of the holding is in the Total Stock Market Fund - which has highly diversified exposure to small/mid/large cap, 36% international, and 10% bonds.  So the adviser has no clue what he's talking about, obviously.

Advisers don't like things to be so simple.  How can they justify all their fees?  I mean, you have your money in a well managed, well diversified fund with extremely low expense ratios that has a 93% chance of out performing your advisers picks.  How dare you!