Target-date funds are supposed to provide a simple, conservative way to invest for retirement. That’s because they gradually decrease allocations to riskier investments, such as stocks, as the funds approach a target year, while increasing allocations to lower-risk bonds and cash. But Fidelity Investments has ratcheted up the relative risk level of its target-date funds. It has been allocating greater percentages of the portfolios to stocks than many comparable funds do and giving fund managers more leeway to choose relatively risky types of stocks.

As a result, Fidelity target-date funds have performed very well in recent years, but risk-averse investors and retirement-plan sponsors have pulled nearly $16 billion over the past four years, according to research firm Morningstar Inc.

Example: Fidelity 2020, whose performance ranks in the top 3% of its category over the past three years, allocated an average of 60% of its portfolio to stocks over the past year, compared with a 40% stock allocation, on average, for funds with the same target year. Also, 11% of the overall stock portfolio is in relatively volatile emerging markets.

Target-date funds overall have proved to be popular. For the 12 months ended September 30, 2017, funds with target-date strategies accounted for 20% of total assets in defined contribution plans such as 401(k)s, up from less than 17% in 2015, according to the publication Pension & Investments. What to do:

If you are a Fidelity customer, instead of choosing a target-date fund closest to your retirement year, consider a fund with an earlier target date. For example, with 12 years until retirement, instead of holding Fidelity Freedom 2030 right now (recently 74% in stocks), you could choose Fidelity 2025 (recently 61% in stocks).

If you don’t need to choose a ­Fidelity fund and want a conservative approach, consider safer, less volatile choices outside of Fidelity that still provide good performance. My research firm recently conducted an extensive survey of more than 20 major target-date-fund providers and ranked them on attributes such as diversification and risk control. Highly ranked target-datefund groups: Pimco RealPath Blend…AllianzGI Retirement…John Hancock Retirement Choices…and Harbor Target Retirement.

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