Finance

Target-date funds, known as TDFs, are a one-stop shop for retirement savers.
They are poised to capture about two-thirds of all 401(k) plan contributions by 2027, per one estimate.
They are well-suited for hands-off investors who crave simplicity, but there may be drawbacks for others with more complex finances, advisors said.

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Target-date funds are a way for 401(k) participants to put their retirement savings on autopilot — and they capture the lion’s share of investor contributions to 401(k) plans.
About 29% of assets in the average 401(k) plan were held in TDFs as of 2023, according to the Plan Sponsor Council of America, a trade group. That share is the largest of any fund category, and is up from 16% in 2014, according to PSCA data.

By 2027, target-date funds will capture roughly 66% of all 401(k) contributions, and about 46% of total 401(k) assets will be in TDFs, according to a 2023 estimate by Cerulli Associates, a market research firm.
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That popularity is largely due to employers’ broad adoption of TDFs as the default investment for workers who are automatically enrolled into their company 401(k) plan.
While the funds carry benefits for many investors, they may have drawbacks for others, financial advisors said.
“Target funds have a place for some investors, but they certainly aren’t and shouldn’t be used for everyone,” said Winnie Sun, managing partner of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC’s Financial Advisor Council.

How target-date funds work

Financial experts generally recommend investors de-risk their nest eggs as they age — typically by shifting from more aggressive and volatile holdings such as stocks to more stable ones such as bonds and cash.
TDFs do this automatically, based on an investor’s estimated year of retirement.

For example, a 35-year-old investor who expects to retire in 30 years would likely choose a 2055 fund. A 55-year-old may pick a 2035 fund. The funds typically come in five-year increments.
The fund’s asset allocation slowly becomes more conservative in the years leading up to, and sometimes after, that retirement year.

A one-stop shop for 401(k) savers

Advocates often laud the simplicity of TDFs, known as a one-stop shop for 401(k) savers who may not have the time or knowledge to adequately manage a custom portfolio.
“From where I sit, target-date funds have been nothing short of the biggest positive development for investors since the index fund,” Christine Benz, director of personal finance and retirement planning at Morningstar, wrote in June.
They take important decisions such as asset allocation and investment selection “wholly out of investors’ hands,” Benz wrote.

TDFs amount to inexpensive and reasonable investment advice for people who may not be able to afford hiring an advisor and who may be prone to making “kooky” investment choices, she wrote. TDFs also discourage behavior known to erode investor returns, like buying high and selling low, she added.
“They’re designed to be easier-to-manage investments for those who just prefer simplicity and more convenience,” Sun said.

There may be drawbacks

However, there are some reasons why TDFs may not work for certain investors, especially those with ample savings outside their 401(k) plan or who want to take a more hands-on approach, advisors said.
For one, just because investors expect to retire around the same age doesn’t mean the same asset allocation is appropriate for each of them.
“What if you’re more conservative or instead prefer more growth, aggressive tech investing, or prefer to invest in socially responsible investments?” Sun said.

From where I sit, target-date funds have been nothing short of the biggest positive development for investors since the index fund.

Christine Benz
director of personal finance and retirement planning at Morningstar

Asset managers have different investment philosophies. Certain fund families may be more aggressive or conservative than others, for example.
Employers generally only offer TDFs from one financial company, and the funds that are offered may or may not align with an investor’s risk profile, experts said.
“It is important that a person understands how much risk they are taking in their target-date fund,” said Carolyn McClanahan, a certified financial planner and the founder of Life Planning Partners in Jacksonville, Florida.
“For example, you would think a 2030 target-date fund would be conservatively allocated, but most are 60% equities because they assume you’ll be drawing off those funds over a long period of time,” said McClanahan, a member of CNBC’s Advisor Council.

Investors may be able to build a less expensive portfolio on their own by using a mix of index funds, though this approach would take more work on investors’ part, she said.
Additionally, TDFs don’t allow for “tax location” of different assets, McClanahan said.
This aims to boost after-tax investment returns by strategically holding stocks and bonds in certain account types.
For example, assets with potential for high growth are well-suited for Roth accounts, since investment earnings are generally tax-free in retirement, said McClanahan.
Experts also generally recommend holding many bonds and bond funds in tax-deferred or tax-exempt accounts.
Despite shortcomings for certain investors, “do target-date funds help investors who are unaware of the basics of investing find their way to a sane investment mix given their life stage?” Benz wrote. “A thousand times yes.” More

Michael Barr, the Federal Reserve’s top banking regulator, will be stepping down Feb. 28, though he will stay on as governor.
There had been speculation that President-elect Donald Trump might replace Barr after he takes office Jan. 20.
Barr said in a statement that “the risk of a dispute over the position could be a distraction from our mission.”

The Federal Reserve’s top banking regulator will be stepping down next month, paving the way for President-elect Donald Trump to name a replacement and heading off a potential confrontation between the two.
Michael Barr’s resignation from the position, which is formally called the vice chair for supervision, takes effect as of Feb. 28, though he will stay on as a governor on the Fed board. His term as Fed governor lasts until 2026.

There had been speculation that Trump might seek to replace Barr after he takes office Jan. 20, the announcement will ease that transition amid speculation that the new president wants someone who is more bank-friendly to take the role.
Though he did not specifically mention the rumors that Trump would attempt to remove him, Barr said in a statement that “the risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
“It has been an honor and a privilege to serve as the Federal Reserve Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses,” he said.
Bank stocks rallied following the announcement. The SPDR S&P Bank exchange-traded fund that tracks the industry’s leaders gained more than 1%.
CNBC.com has reached out to the Trump transition team for comment.

In a release announcing the decision, the Fed noted that it will not make any major decisions on rules and regulations until a successor is named. The bank has been revising a set of new rules, dubbed the Basel Endgame, that has been broadly unpopular in the industry.
Because the Fed is limited to seven board members, Trump will have to name someone from the current group to the new position.
The position was created following the 2008 financial crisis that saw the implosion of multiple big names on Wall Street. Under Barr’s watch, the industry saw a crisis in early 2023 in which Silicon Valley Bank and a few other names collapsed, forcing the Fed to implement a liquidity facility to keep the issues from spreading.
In recent days, speculation had swelled that Trump might seek to force Barr from office. A Reuters report in late December indicated that Barr was consulting with a law firm over his legal options should the president-elect make a move.

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Chinese robot vacuum cleaner company Roborock on Monday revealed a new model with an artificial intelligence-powered folding arm.
Using AI that the company developed, the Roborock Saros Z70 can detect and remove obstructions such as socks, small towels, tissues and sandals weighing less than 300 grams (10.58 ounces), according to the company.
It’s the latest step toward what Roborock President Quan Gang expects will be the inevitable: that robot vacuum cleaners become as essential as washing machines.

Beijing-based robot vacuum maker Roborock revealed a new model in January 2025 with an artificial intelligence-powered folding arm for removing obstacles.
CNBC | Evelyn Cheng

BEIJING — Chinese robot vacuum cleaner company Roborock revealed a new model on Monday that comes with a folding arm for removing socks and other obstacles — a feature powered by artificial intelligence.
It’s the latest step toward what Roborock President Quan Gang expects will be the inevitable: that robot vacuum cleaners become as essential as washing machines.

That’s something that could happen in as soon as three years, especially with the emergence of AI, Quan told CNBC in a late November interview. “If the era of AI flourishing has really arrived, I’m confident that robot vacuum cleaners will be the first category to apply AI,” he said in Mandarin, translated by CNBC.
Using AI that the company developed, the Roborock Saros Z70 can detect and remove obstructions such as socks, small towels, tissues and sandals weighing less than 300 grams (10.58 ounces), according to the company.
The Saros Z70 is set for release in major global markets in the first half of the year, but Roborock has yet to announce pricing. The product reveal comes ahead of the Consumer Electronics Show that kicks off Tuesday in Las Vegas.

Ever since Massachusetts-based iRobot launched its Roomba floor vacuuming robot in 2002, the circular machines have evolved to include mopping and the ability to automatically return to the charging base. Many companies, including several based in China, now sell robot vacuum cleaners.
Beijing-based Roborock started selling to the U.S. in 2018, Quan said, noting that sales in the country didn’t start to take off until 2023. Roborock also sells its robot vacuums in countries such as Germany, China and South Korea, and makes sure to adhere to local data privacy rules, Quan said.

But robot vacuum penetration rates remain low — just over 10% in developed countries and single digits in developing countries, Quan said. He said that’s both a challenge and a potential for growth, which he expects can get a boost from the integration of artificial intelligence.
The Verge and Wired late last year both named different Roborock models the best robot vacuum available. But the machines aren’t cheap.
“Roborock’s S8 MaxV Ultra ($1,799.99) is an exceptional vacuum cleaner,” The Verge said, noting it is “the best model in the relatively new category of ‘hands-free’ robot vacs, bots that do virtually everything for you: empty their bins, refill their mop tanks, and clean and dry their mop pads.”
“Roborock invented this category with the S7 MaxV Ultra and has been steadily improving it,” The Verge said.
Wired selected Roborock’s Qrevo S, which sells for $800 on Amazon. The review highlighted the Qrevo’s lidar-based navigation and AI feature which enable the machine to distinguish between carpets and tiles for vacuuming or mopping, respectively.
Competition is fierce. CNET said two other companies’ robot vacuums tied for best of 2025, the $900 Ecovacs Deebot T30S Combo — which also has a self-emptying dustbin — and the $359 iRobot Roomba Combo J7 Plus.

Supporting an AI research lab

Shares of Shanghai-listed Roborock closed 2.6% higher Friday after reports emerged of the Saros Z70 and its robotic arm. The stock climbed 10.3% in 2024.
Operating revenue rose by 23.2% for the first three quarters of 2024 to 7 billion yuan ($960 million), with profit of 1.47 billion yuan. Roborock does not break out revenue by region.
Quan said that soon after Roborock’s founding in July 2014, the company sensed the importance of artificial intelligence and set up a dedicated lab in Shanghai and a research institute in Shenzhen. Each location houses around 30 researchers, who only need to focus on technology, in contrast to the product development team that must meet deadlines and consider profit, Quan said.
The next challenge is to expand the number of researchers to around 300 people, Quan said, noting it’s been hard to find qualified talent.
The company spent 9.1% of its operating revenue in the first three quarters of 2024 on research and development, according to CNBC calculations of public figures. That’s up from slightly more than 7% in each of the past three years, the data showed.
Roborock on Monday also announced updates to its washing machines, which can dry clothes in the same unit.
— CNBC’s Sonia Heng contributed to this report. More

The S&P 500 stock index gained 23% in 2024. The tech-heavy Nasdaq grew about 29%.
Lofty stock returns and muted bond growth may mean investors need to rebalance their allocations to bring them back to target.
Otherwise, a portfolio may be riskier than intended.

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Stocks soared in 2024.
Congratulations! After taking a victory lap, it may be time to adjust your portfolio — because those heady returns likely threw your investment allocations out of whack.

The S&P 500, a stock index of the largest public U.S. companies by market capitalization, gained 23% in 2024. Cumulative S&P 500 returns over the past two years (53%) were the best since 1997 and 1998.
Long-term investors generally have a target allocation of stocks to bonds — say, 60% stocks and 40% bonds. But lofty returns for stocks relative to muted ones for bonds may mean your portfolio holdings are out of that alignment, and riskier than you’d like. (U.S. bonds returned 1%, as measured by the Bloomberg U.S. Aggregate Bond Index.)
This makes it a good time for investors to rebalance their portfolios, financial advisors said.

Rebalancing brings a portfolio in line with investors’ long-term goals, ensuring they aren’t over or underweighted “inappropriately” in one particular asset class, said Ted Jenkin, a certified financial planner based in Atlanta and member of CNBC’s Financial Advisor Council.
“Every car should get an alignment check in the beginning of the year and this is nothing different with your investment portfolio,” said Jenkin, co-founder of oXYGen Financial.

How to rebalance your portfolio

Here’s a simple example of how portfolio rebalancing works, according to Lori Schock, director of the Securities and Exchange Commission Office of Investor Education and Advocacy.
Let’s say your initial portfolio has an 80/20 mix of stocks to bonds. After a year of market fluctuations, the allocation has changed to 85% stocks and 15% bonds. To return the mix to 80/20, you can consider selling 5% of your stocks and using the proceeds to buy more bonds, Schock said.
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“Set your targets for each investment — how much you’d need to grow your money to be satisfied, and how heavy each investment should be relative to the rest of your portfolio,” said Callie Cox, chief market strategist at Ritholtz Wealth Management.
“If the allocation gets too big or small, consider buying or selling to get your money back in balance,” she said. “Wall Street portfolio managers do this on a regular schedule. It’s a prudent investing exercise.”

A ‘huge gap in market fortunes’ in 2024

Rebalancing isn’t just about stocks versus bonds. Investors may also be holding other financial assets like cash.
A diversified portfolio also generally includes various categories within asset classes.
An investor’s stock bucket might have large-, mid- and small-cap stocks; value and growth stocks; U.S. and international stocks; and stocks within different sectors like technology, retail and construction, for example.

It’s important for investors to consider whether target weights to certain categories have also gotten out of whack, advisors said.
“There was a huge gap in market fortunes last year,” Cox said. “Tech stocks blew most other sectors out of the water, and the U.S. ran away from global markets.”
The so-called “Magnificent 7” megacap tech stocks — Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla — accounted for more than half of the S&P 500’s total gain in 2024. The Nasdaq, a tech-heavy stock index, swelled almost 29%.

Non-U.S. stocks “continued to underperform,” returning about 5% last year, according to experts in Vanguard’s Investment Advisory Research Center.
“Right now, I think it’s smart to review your tech investments and think about taking some profits,” Cox said. “Tech rules our lives, but it doesn’t always rule our portfolios.”

Don’t forget about taxes

Investors in 401(k) plans may have automatic rebalancing tools at their disposal, which can make the exercise simple if investors know their risk tolerance and investment time frames, Jenkin said.
Additionally, investors may have mutual funds or exchange-traded funds whereby professional money managers do the regular rebalancing for them, such as within target-date funds.
When rebalancing, it’s also important to consider tax implications, advisors said.
Investors with taxable accounts might trigger “unnecessary” short- or long-term capital gains taxes if they sell securities to rebalance, Jenkin said. Retirement investors with 401(k) plans and individual retirement accounts generally don’t need to consider such tax consequences, however, he said. More

A holding page for Keith Gill, a Reddit user credited with inspiring GameStop’s rally, before a YouTube livestream arranged on a laptop at the New York Stock Exchange on June 7, 2024.
Michael Nagle | Bloomberg | Getty Images

Crypto trades jumping. Roaring Kitty boosting meme stocks. Broader market ripping on no apparent catalysts.
Animal spirits are on the loose at the dawn of 2025 trading.

Many speculative pockets of the stock market surged Thursday, the first session of the new year, right after the S&P 500 closed out the best two-year run since 1998.
Stocks tied to the price of bitcoin jumped as the cryptocurrency climbed back over $96,000. Microstrategy added 3.6% after surging more than 360% in 2024. Crypto-related companies Coinbase, Robinhood, Mara Holdings and Riot Platforms also traded higher after a big 2024. A crypto token called “fartcoin” skyrocketed 45% and now has $1.38 billion market value.
Elsewhere, retail traders active on social media were busy playing a guessing game after online personality Roaring Kitty posted a cryptic gif on X featuring a “Chappelle’s Show” sketch in which comedian Dave Chappelle plays the late funk musician Rick James.
One of James’ songs is titled “Unity,” and some believe the meme stock leader, also known as Keith Gill, was referring to Unity Software, whose stock soared 9.1%. Others thought he was back touting his original favorite GameStop, whose shares also caught a bid.

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Meanwhile, semiconductor stocks — 2024’s big winners — helped lead the market again after the artificial intelligence trade lost some steam at the end of last year. Nvidia gained 3% Thursday.

What’s more, golf stock Topgolf Callaway Brands surged 14.5% on the back of an upgrade at Jefferies to buy from hold. The investment bank said shares of the golf equipment maker looked oversold and raised its price target to 65% above where the name closed the year.
With a pickup in market speculation, broad stock indexes were briefly higher to kick off 2025. The Dow Industrial Average advanced as much as 300 points before losing its momentum to close the day lower.
Thursday’s dramatic moves resembled the initial rallies on the back of Donald Trump’s election victory in November, as investors bet his pro-business policies would drive companies and the economy to strong growth. Those gains slowed toward the end of 2024 as concern grew that the president-elect’s protectionist policies could stir inflation or disrupt supply chains, and as the Federal Reserve signaled fewer interest rate cuts in 2025.
“Many investors assume that the incoming administration’s push for deregulation will unleash ‘animal spirits,'” Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, said in a recent note to clients. “But what if it only accelerates the concentration of monopoly power in the hands of a few, diluting the efficacy of broad economic measures and leaving behind even larger swaths of the populace?”
Correction: Online personality Roaring Kitty posted a gif on X featuring a “Chappelle’s Show” sketch in which comedian Dave Chappelle plays the late funk musician Rick James. An earlier version misstated the details of the post.

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Ken Griffin, founder and CEO of Citadel, speaks during The New York Times’ annual DealBook Summit in New York City, Dec. 4, 2024.
Michael M. Santiago | Getty Images

Billionaire investor Ken Griffin’s handful of hedge funds at Citadel all posted double-digit returns in 2024, led by its tactical trading strategy.
Citadel’s multistrategy Wellington fund, its largest, finished the year up 15.1%, according to a person familiar with the returns. All five strategies used in the flagship fund — commodities, equities, fixed income, credit and quantitative — were positive for the year, the person said.

The Miami-based firm’s tactical trading fund was the standout performer, with a 22.3% return for 2024, the person said. Citadel’s equity fund returned about 18%, while its global fixed income strategy gained 9.7%.
Citadel declined to comment. The hedge-fund giant had $66 billion in assets under management as of December.
The stock market just closed out a banner year with the S&P 500 surging 23.3%, building on a gain of 24.2% in 2023. The two-year gain of 53% is the best since the nearly 66% rally in 1997 and 1998.
Griffin recently criticized the steep tariffs President-elect Donald Trump has vowed to implement, saying crony capitalism could be a consequence.
The CEO also said he’s not focused on taking Citadel Securities public in the foreseeable future. The securities firm is a Miami-based market maker founded by the 56-year-old Florida native in 2002. More

A little over a decade ago Seth Klarman, a hedge-fund titan, worried that an asset-price bubble was emerging. He identified Tesla as one of the firms best exemplifying exuberance in the market. At the time, Elon Musk’s electric-vehicle company was worth around $30bn. Today its stockmarket value is $1.3trn. More

To get a full sense of the disruptive potential of Donald Trump’s economic agenda, look beyond the limelight hogged by Elon Musk to the wider cast of characters in the president-elect’s orbit. Russ Vought, a budget director, promises to “break the bureaucracy to the presidential will”. Peter Navarro, a trade adviser, muses about cancelling America’s trade deal with Canada and Mexico. Andrew Ferguson, an antitrust official, rails against big tech firms for suppressing dissident speech. More