Daniel Smith and his wife recently received notices from Fidelity Investments with "Important Notice" stamped on the outside.
Both Smiths, who live in Norwood, Mass., have Fidelity's Freedom funds in retirement plans, and the letter was about their holdings.
The Freedom funds are "life-cycle funds," issues that age and become more conservative along with the investor. They invest entirely in other Fidelity funds and are designed as a one-size-fits-all default choice, the kind of fund an investor is supposed to be able to put money into and forget about.
That's precisely what she did; she never bothered to open Fidelity's letter.
Her husband opened his, though, and was dismayed to learn that the Fidelity Freedom funds he owns - the 2000 and 2010 portfolios - have changed their asset allocation formula to gain more leeway to invest in junk bonds.
Daniel Smith, 59, is alarmed for several reasons, not the least of which is that as a self-described "conservative investor" he would never invest in junk bonds on his own.
Moreover, he fears that the funds are moving away from their predetermined strategy and investment objectives, chasing yields to boost returns while adding an extra level of danger.
He dislikes the principle of changing the allocation formula "because these are buy-and-hold, stay-the-course, average-things-out-in-the-end funds, and now I am exposed to the manager picking a good time to make some moves."
Smith's concerns are understandable, and whether it is the Fidelity Freedom offerings or the life-cycle funds offered by dozens of other fund firms, little changes in strategy appear frightening because the sales pitch that brought the investor in involved a safe, static approach.
If you buy a ticket on the life-cycle journey, hearing that your airplane's engines are being fixed mid-flight is a bit alarming.
Fidelity laid out portfolio alterations - adding some new small-cap and value funds beyond increasing the junk-bond leeway - but did little to describe the reason that the changes were made.
When pressed, Fidelity officials said the changes are part of evaluations into the best investment mix and are based on the experience of shareholders in the funds. If the aim of a life-cycle fund is to provide a safe, secure journey, the demographics of the shareholders play a part in setting the agenda.
As a result, changing the process is no big deal.
"It is OK to rethink things as the world changes," said Roger Gibson of Gibson Capital Management in Pittsburgh, one of the investment world's leading asset allocation experts.
"Think back 10 years and how you might have set up an allocation strategy then, and what you have learned since would almost certainly have wanted to make some adjustments. ... It's probably a good thing when management says it wants to work the portfolio because they have another decade of experience under their belts."
What's more, although Smith and many other investors who are ready to retire might have an aversion to junk bonds, that is precisely why Fidelity and many investment counselors suggest he should have them.
John Sweeney, senior vice president of mutual funds product management at Fidelity, said, "The Freedom funds are built to give investors the exposure to assets they might not get otherwise if they were doing this on their own. They provide additional diversification, which reduces the overall risk of a portfolio."
Smith acknowledges that a 5 percent allocation to junk in one fund is not going to make or break his retirement. The changes in the portfolio are subtle enough that he'll be hard-pressed to notice a significant change in future performance. But that doesn't make him feel more comfortable.
Therein lies a key weakness of the life-cycle funds.
Most of these funds are ultra-diversified, sticking to rough allocation guidelines.
"You get a black-box approach, and some people get a look inside and find out they don't actually like what is in there," says Jim Lowell, editor of the Fidelity Investor newsletter. "They may feel the portfolio is too aggressive, or too conservative, but they don't like what they see when they get to see the investment decisions being made."
That's why a life-cycle fund might be an ideal choice for his wife but an uncomfortable choice for her husband. She's willing to let the "Important Notice" go unread, while he gets nervous reading it.
In the end, those considering a life-cycle fund need to know as much about themselves as about the funds. Specifically, they must know whether they are custom shoppers or are willing to buy off the rack.
Life-cycle funds are an off-the-rack item, and if the investor finds them scratchy and ill-fitting, a more customized portfolio is the way to go. That means building a fund portfolio rather than a ready-made one.
Chuck Jaffe is senior columnist for MarketWatch. He can be reached at email@example.com or Box 70, Cohasset, MA 02025-0070.