Life-Cycle Fund
A special category of balanced, or asset-allocation, mutual fund in which the proportional representation of an asset class in a fund's portfolio is automatically adjusted during the course of the fund's time horizon. The automatic portfolio adjustments run from a position of higher risk to one of lower risk as the investor ages and/or nears retirement.
Also referred to as "age-based funds". Investopedia Says:
Proponents of life-cycle funds cite the convenience to investors of putting their investing activities on autopilot through the use of just one fund, which is managed for them. On the other hand, critics of these funds say that their "one size fits all" approach is suspect. For investors who don't want to take responsibility for their retirement investing, a life-cycle fund may be appropriate. However, for those who want to take the time and make the effort to direct the management of their investments, life-cycle funds should probably be avoided. Related Terms:
Active Management
Asset Allocation
Balanced Fund
Expense Ratio
Hybrid Fund
Lifestyle Fund
Mutual Fund
Portfolio
Targe-Date Fund
Time Horizon |