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In changes that have raised the potential investment risks in many 401(k) retirement accounts, several major fund companies are increasing the stock allocation of their target-date funds, which are used by many of those with such plans.

BlackRock Inc, Fidelity Investments and Pacific Investment Management Co—all firms that have seen returns in their target-date funds lagging competitors—have made adjustments in the past year so that 401(k) plan participants, particularly those who are younger to middle age, are more invested in equities. In some cases employees who are in their 40s now find themselves in funds that are 94% allocated into stocks, up more than 10 percentage points.

The changes have prompted concerns from consultants and analysts who worry that the fund managers are raising the risks too high for 401(k) investors as they seek higher returns, perhaps as a way to boost their own profiles against rivals.

This anxiety could grow if the recent decline in the U.S. stock market—the S&P 500 is down 4.5% since reaching an all-time high in mid-September and dropped more than 2% on Thursday—gains momentum. On the other hand, the increased bets on equities can be seen as a vote of confidence in the bull market, and are also a reflection of expectations of low returns from bonds in the next few years if interest rates climb.

"The shared characteristic these funds have is they have not been doing so well since 2008," said Janet Yang, a fund analyst at Morningstar. "The question is if the markets had gone down, would they have made these changes?"

For their part, executives at these firms say the changes are based on optimistic long-term forecasts for equities, lowered expectations for bond market returns and a better understanding of how much investors, particularly younger ones, rely on these funds as their primary retirement savings vehicle.

Target-date funds contain a mix of assets, such as stocks and bonds and real estate, and automatically adjust that mix to be less risky as the target maturity date of the fund approaches. The idea is that retirement savers can choose a target-date fund that lines up with their own expected retirement year and then not have to worry about managing their money.

These funds have increasing significance for retirement savers, because employers can and do automatically invest workers' savings in target-date funds, though the workers can opt out. Some 41% of plan participants invest in these funds, up from 20% five years ago, according to the SPARK Institute, a Washington DC-based lobbyist for the retirement plan industry.

Nevertheless, the recent tilt towards heavier equity holdings raises questions about whether workers are entrusting professional money managers who might end up buying equities at or near market highs—the S&P is up 189% since March 2009.

"Our concern is that this is happening after a pretty good run in the equity market," said Lori Lucas, defined contribution practice leader at Callan Associates, a San Francisco-based consultant to institutional investors. "If it's a reaction to the fact that some target-date funds haven't been competitive then it is a concern."

A more aggressive approach has worked for some funds in recent years.

The target-date fund families of BlackRock, Fidelity and Pimco have performed among the bottom half of their peers over the last three- and five-year periods, according to Morningstar. Meanwhile, more aggressive target-date fund families, like those managed by The Vanguard Group, T. Rowe Price and Capital Research & Management, ranked among the top half of their peers.

As of June 30, BlackRock's three-year return for its 2050 fund was 10.6%, according to Morningstar, compared with 10.16% for Fidelity's similar fund and 7.14% for Pimco's comparable fund. Meanwhile Capital Research's 2050 fund returned 13.27% and Vanguard's fund returned 12.26% for the same period.

Furthermore, with average expenses of 0.85% per year, these funds charge more than the 0.7% in fees levied by the typical actively managed balanced fund, according to Morningstar. The firms' pitch is that investors are paying more for peace of mind and a set-it-and-forget it approach to managing their retirement money. Workers willing to make their own mix of indexed stock and bond funds could pay considerably less. The average expense ratio for an equity index fund is 0.13% and 0.12% for a bond index fund.

"There is some kind of expectation that we are making these changes because of the equity markets or because of what competitors are doing and that is incorrect," said Chip Castille, head of BlackRock's U.S. retirement group.

BlackRock decided to make its changes after a four-year research project cast new light on how younger workers look at their plans. Previously, BlackRock's funds were focused on making sure that investors had enough at retirement. But given that employees' wages tend to be flat or go up in value slowly, like a bond, BlackRock wanted to make sure that the target-date funds were designed to provide greater returns during the course of employees' lifetimes, Castille said.

That, along with the firm's positive 10-year forecast for equities, resulted in the changes, he said.

With the BlackRock changes, which take effect next month, 401(k) participants with 25 years left until retirement will see their equity allocation jump to 94% from 78%. Investors at retirement age saw their equities allocation jump to 40% from 38%.

Executives at the firms note that the increases in equities all fit within the age appropriate risk for the investors, and that those investors close to or at retirement are seeing a very small bump in their equities weightings.

Also they note that they believe the changes will combat risks of not having enough money at retirement due to inflation and also address concerns that as people live longer they will need more in retirement.

Fidelity made its changes in January after it revamped its capital markets forecasts, which it revisits annually, said Mathew Jensen, the firm's director of target-date strategies.

Specifically, Fidelity has lowered its forecasts for bond returns from 4% a year to 1% to 2 %, not including inflation. That along, with internal research that showed that younger workers were not saving enough, led to the decision.

"None of our work was saying 'hey the equity markets did well, we should be in equities," Jensen said. "It was about if we have a dollar today, how do we want to put it to work based on what our capital markets assumptions are telling us."

Now an investor in Fidelity's 2020 fund has 62% invested in equities, compared with 55% previously, while an investor near or at retirement is 24% in equities, up from 20%.

Pimco raised the equity allocation in its target date funds late last year by 5 percentage points for some funds and 7.5 percentage points for others. The equity allocation for those at retirement is now 20%, up from 15%, while those investors planning to retire in 2050 saw their equity allocation jump to 62.5% up from 55%.

"The decision was supported by our view that the global macro environment had become more stable post the financial crisis," said John Miller, head of U.S. retirement at Pimco, in an e-mailed statement.