Popular Retirement Funds Are Getting Hammered as Tech Stocks Plunge

Popular Retirement Funds Are Getting Hammered as Tech Stocks Plunge

Posted on May 2nd, 2022

Anyone who dares peek at their 401(k) can see the carnage: Many popular funds in workplace retirement savings plans are down more than 13% so far this year. Some are even in or approaching, bear market territory.

Many of the retirement funds are, unsurprisingly, growth-oriented and heavy on on mega-cap tech stocks such as Amazon.com Inc., which plunged 14% Friday after the e-commerce giant reported a quarterly loss and said it may lose money again in the current period.

The epic bull run in mega-cap tech that began in March 2020 led many funds to become ever more concentrated in a handful of companies. The T. Rowe Price Blue Chip Growth fund, for example, held more than 46% of the fund in five stocks as of March 31 — Microsoft Corp. (11.6%), Amazon (10.9%), Alphabet Inc. (10.2%), Apple Inc. (8.7%) and Meta Platforms Inc. (5%) — and more than 60% of assets in the top 10 stocks. The fund is now down more than 25% for the year.


Fidelity Contrafund, another big 401(k) plan favorite, held about 33% of the fund in its top five holdings as of Feb. 28, with Amazon its top stock, at 8%. Contrafund is now down more than 20% year-to-date.

The S&P 500 has lost more than 13% so far this year. While the recent volatility is gut-wrenching for many people nearing or in retirement, it’s an opportunity for millennial investors, said financial planner Thomas Kopelman, the 27-year-old co-founder of AllStreetWealth.

“For young people, the market going down is okay since you aren’t going to be using this money for a very long time,” Kopelman said. “So get the money in, and stop waiting for the perfect time to buy the dip.”

Original article: https://www.fa-mag.com/news/popular-retirement-funds-are-getting-hammered-as-tech-stocks-plunge-67655.html

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