Six Million Fidelity Savers at Risk of Losing Their Retirement Fund!
We look forward to the day when we can finally retire from working and start spending our lives in leisure and doing the things we love. That’s why we work hard to save more money while we’re still young to secure our future.
But, what if you’re at risk of losing the retirement fund that you’ve worked so hard to earn? What if all your money is in danger of losing in a snap? That’s exactly what millions of Fidelity users are feeling right now. They’re uncertain about their future after learning that their retirement fund is at stake.
Fidelity, Among the Best Mutual Fund Investments
Fidelity has been among top retirement fund choices for the past three years. This franchise had outperformed around 85% of its competitors, enabling it to overcome its sub-par performance in the prior years. In the 90s, Fidelity diversified their investments to guarantee high return rates.
The company also projected an ideal retirement year when its users can claim their retirement funds whenever they would want. This prudent method attracted millions of savers to invest in their company making the firm’s performance in the stock market to hit sky levels. This allowed Fidelity to enjoy investing in emerging markets such as bonds and other target-date funds with ease.
But, after the company changed their strategy in 2014, things went south. Fidelity portfolio managers decided to follow a new strategy by investing in volatile markets. Examples of these are Chinese stocks and US Tech shares. These emerging markets have higher return rates that can boost your retirement fund. But, in doing so, it exposed millions of its investors in high-risk investments.
These riskier investments prompted millions of savers to withdraw their retirement funds after being uncertain whether these types of investments will guarantee returns for their retirement funds.
For the past 4 years, Fidelity recorded an astounding $16 billion withdrawals from its savers. Engaging in these type of investments is sometimes considered to be even riskier than dealing with the 2008 financial crisis when Fidelity’s fund performance dropped more than 40%. Some fund managers even commented that Fidelity’s investment strategy is a ticking bomb that can lead to their downfall.
Fidelity denied any allegation that their company isn’t performing well. According to the company’s CEO, their firm is very confident that the risks are manageable. The reason behind this stands on American’s lifespan which is considerably long. Thus, they can retire later, enabling them to recover any investment losses. Furthermore, Johnson reiterated that their retirement fund is a lifetime savings solution. It doesn’t have a termination, that’s why their retirement funds are able to perform well. On the other hand, their fund managers commit to delivering outstanding performance while managing the risks.
Despite the company’s reassurance, millions of American savers are still in doubt. In fact, it’s Freedom 2020 funds’ performance tumbled down to 6%, trailing behind 81 competitors. Meanwhile, it’s 2040 fund tumbled down to 9%. Its stock market share also plummeted down to 21% of its total fund assets. This is way lower than its 43% yield during the 2008 financial crisis.
Millions of American to Lose their Retirement Fund
Aside from the average American savers making net withdrawals, its investors also pulled out their money from Fidelity. They stated that they have lost their faith in letting Fidelity handle their retirement funds. They said that they would not risk losing their retirement funds due to the company’s frequent change in strategy. Furthermore, they cannot handle the increased risk they have to take for their investments.
The French company Dassault Systems advised the Fidelity to reassess its fund strategy to manage their risk appetite if they want to keep their company running. Dassault System had previously suspected that Fidelity didn’t have a clear financial path direction since they like to implement changes in abrupt and enter all investments in hopes of high return. Daffault System stated that Fidelity needs to have a clear financial goal in mind asap. This will enable them to better identify the appropriate investments and risks so they won’t yield huge financial losses in the future.
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