Lifecycle fund

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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Investors who entrust their retirement portfolio to a lifecycle fund often do so because they're busy, confused, or overwhelmed by investment choices.
But the move can throw a delicately allocated lifecycle fund off balance.
PPA allows employers to default participants' assets into a managed account, lifecycle fund, or a lifestyle fund in order to ensure that plan participants are in a proper asset allocation based on age.
Most lifecycle fund offerings in today's market are too aggressive in their equity exposures: The appropriate range of equity allocation in retirement is between 5% and 25% (if an investor's primary goal is to not outlive his or her assets);
This enhancement enables producers to offer an appropriate Lifestyle or Lifecycle fund to clients or can put together a series of fund choices from the John Hancock Trust that would meet the client's needs," Mr.
The enhancements adjust the initial asset allocation and the investment allocation "glide path," or the manner in which the lifecycle fund will slowly be reallocated over time, across all target retirement dates and are effective immediately.
One option that could make this easier is a target-date lifecycle fund, which is becoming an increasingly popular option in workplace retirement plans.
The Pension Protection Act includes provisions for automated plan features like automatic deferrals into a default investment option such as a strategic allocation or lifecycle fund, and automatic annual increases in an employee's salary deferral rate that take effect for plan years beginning in 2008 provided certain requirements are met.
Findings on lifecycle funds, including target-date funds and target-risk funds, show the focus shifting from asset maximization to liability matching.
Qualified default investment alternatives--known as lifecycle funds or pre-mixed funds--are a positive way to simplify portfolio allocation decisions.
A recent survey of more than 200 large employers by Aon Hewitt shows 83% offer either targetdate or lifecycle funds in their 401(k)s, and more than a third of the remaining companies are considering doing so.
To gain access to alternative asset classes in a plan that doesn't provide a direct option for investing in them, he suggests looking at target-date, target-risk or lifecycle funds, some of whose models include alternative asset classes.