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Your 401(k) is safe from risky startup investments

Yesterday there was a big New York Times story about how mutual funds are plugging cash into privately-held tech unicorns.

This isn’t big news to most Fortune readers — nor to anyone who’s paid passing attention to tech finance over the past 24 months — but most of the existing commentary has been about how this new cash pool has impacted startups (including their reluctance to IPO). The NY Times flipped the direction, arguing that such highly-valued and illiquid securities could pose dangers for those whose 401(k) accounts are reliant on mutual funds. Such scary stuff that it made Drudge’s front page.

Unfortunately, there wasn’t nearly enough context.

For example, the piece talks about how Fidelity’s Contrafund has plugged $390 million into Uber, Airbnb and Pinterest. What it doesn’t mention is that Contrafund’s current portfolio NAV is around $112 billion. In other words, those startup investments represent just around one-third of 1% of Contrafund’s overall value. Not exactly the sort of thing that would cause retirees to grab their pitchforks, were all three of those companies to collapse tomorrow. The more serious investments wouldn’t come until those companies go public, with Fidelity expecting to have a leg-up on allocations.

In fact, the only mutual fund I know of with serious private tech stock exposure is T. Rowe Price’s New Horizons Fund, which describes itself as extremely high-risk, in part, due to its predilection for privately-held tech company stocks (although most of its holdings are publicly-traded securities). In other words, there is no rug-pulling going on.

I’m all for pushing panic buttons, but not in this case.

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