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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References in periodicals archive ?
For example, in one study participants chose between two Life-Cycle Funds (funds that gradually shift their balance from stocks to bonds), where one fund was riskier than the other, and each fund was described in basic or more complex terms.
Worden, 1999, Investors' Asset Allocations Versus Life-Cycle Funds, Financial Analysts Journal, 55(5): 37-43.
One reason for these funds' popularity is that in 2007 the Department of Labor passed a regulation that led many employers to use life-cycle funds as the defaults in 401(k) plans.
There are also short essays commenting on the challenges of life-cycle funds in the context of the financial crisis.
The product can also be applied to life-cycle funds or to asset-allocation programs.
Though many analysts argue that traditional 401(k) plans, as invested by employees, will not meet retirement goals, there are two types of preset asset-allocation investments that may offer a possible solution: target retirement and life-cycle funds.
Under the terms of the agreement, Mercer's outsourcing business will be able to provide new and existing DC clients fully integrated access to IncomeFlex Target, which resides within target-date or life-cycle funds, or in asset-allocation programs, adding a guaranteed lifetime income component to these increasingly popular in-plan investment options.
AARP Financial's life-cycle funds: In 2006, AARP Financial successfully launched a set of three life-cycle funds to simplify investing for its customers, many of whom found themselves overwhelmed by the thousands of mutual fund options available in the marketplace.
Under the terms of the agreement, Hewitt will provide multi-channel, fully integrated access to IFX Target, a leading in-plan retirement solution that delivers guaranteed lifetime income, downside income protection, and growth potential for individuals with assets in target-date or life-cycle funds.
Among new features in CIGNASelect: Access to a broad range of investment options -- from fixed income to life-cycle funds to a self-directed brokerage account investing in more than 4,500 mutual funds, stocks and bonds.
Prudential Retirement today debuted a new retirement-plan solution specifically designed to deliver guaranteed lifetime income, downside income protection, and growth potential for individuals with assets in target-date or life-cycle funds, or in asset-allocation programs.
Consider a focus on investing and asset mix -- similar to 401(k) life-cycle funds where an individual with 40 years until retirement, as an example, automatically invests 35% of savings in bonds and 65% in stocks.