Lifecycle fund

(redirected from Life Cycle Funds)

Lifecycle Fund

Any mutual fund in a fund family that offers funds with varying levels of risk that are targeted at potential shareholders in different age groups. For example, a fund family may offer three lifecycle funds, one aimed at investors in their 20s and 30s, one at persons in their 40s and 50s, and one for those nearing or in retirement. In this situation, the first fund will carry the most risk because younger investors often seek to make a large return while the third will carry the least risk as investors wish mainly to protect their savings and pensions.

Lifecycle fund.

A lifecycle fund, which is a fund of funds, invests in individual mutual funds that a fund company puts together to help investors meet their objectives without having to select individual funds.

Some companies offer a set of lifecycle funds, each with a different level of risk and return, from conservative to aggressive. In that case, you may choose a lifecycle that's appropriate for reaching your goals within the time frame you've allowed.

The typical pattern is for younger investors to choose a more aggressive lifecycle fund and those nearing retirement to choose a more conservative fund.

With target date funds, which are a type of lifecycle fund, you choose a target retirement year, and the fund manager invests and reallocates your money more and more conservatively as you near retirement.

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Life cycle funds are a recent innovation designed to relieve employees of the explicit choice of retirement account allocations.
I will also consider how risk in such plans might be reduced by life cycle funds and other means and how much employees might gain from such investment strategies.
For plan sponsors, the ability to offer a retirement plan management alternative that supplements the ever-popular set-it-and-forget-it Target Date and Life Cycle funds (averaging 6-8% returns) is enormously valuable, especially when you consider the amount of time and productivity wasted by employees worrying about their future.
If all this seems confusing (and it should), ask your bank or broker about "target date" or life cycle funds.
Founded in 1970, we offer equity and fixed income portfolios as well as a range of blended asset portfolios, such as life cycle funds, that use a mix of stocks and bonds.
The TSP now offers professionally managed life cycle funds that diversify investments throughout the five existing TSP funds through various asset allocations.
For instance, they may not understand that life cycle funds are diversified.
Though increasing in popularity, life cycle funds are not quite the panacea the investment industry has made them out to be, perhaps even less so in the 401(k) environment.
Few managers today offer true life cycle funds to individuals participating in 401(k) programs.
Few life cycle funds in the market also focus on thorough investment education.
Some of the risks of using life cycle funds could include liability from market exposure and risk of loss due to market volatility.
Because of their simplicity, low-costs, and broad diversification, life cycle funds appeal to a broad range of investors seeking a single choice option, including younger individuals just starting their retirement programs, as well as those looking for an ideal vehicle for their IRA or company retirement plan rollover.

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