Tailoring Your Allocation to the Stage You’re in With Life Cycle Funds


In an effort to make financial life easier, the concept of a “life cycle” mutual fund was born. The idea was to offer specific asset allocations and investment selections for specific investment objectives—all bundled up in one fund. And some companies provide these kinds of funds in their 401(k) plan offerings.

Today, life cycle mutual funds go by many names including “strategic allocation”, “asset manager,” “personal strategy,” “life strategy” and “target retirement.” However, the underlying theme of these funds is the same—one fund that would answer the asset allocation needs of an individual at a particular stage in life.

But nothing is ever easy. Although these funds were created to make things simpler for investors, the layered complexity of life cycle fund choices presents a difficult investment task.

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