Target date funds overweight junk bonds

More bad news about target-date funds. That market grew to $311 billion last year, thanks in part to employers including them in automatic enrollment options for company-sponsored 401(k) plans. However, Bloomberg cites Morningstar data that shows six of the nine largest U.S. target-date fund providers by assets use junk bonds in their 2010 portfolios, and the U.S. default rate on these bonds was over 11 percent last month, according to Standard & Poor’s.